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Oral Answers to Questions
(11 years, 11 months ago)
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Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
1. What steps she is taking to reduce the burden of administration on police. [108027]
The Secretary of State for the Home Department (Mrs Theresa May)
I have made it clear that police should focus on cutting crime and not on doing paperwork. That is why I have already announced a package of policies that will cut police bureaucracy, saving up to 4.5 million police hours per year, the equivalent of putting more than 2,100 officers back on the beat.
Eric Ollerenshaw
Does my right hon. Friend agree that the election of police commissioners in six months’ time should allow a much more localised focus on lifting these burdens and enabling more police time to be spent on the front line?
Mrs May
I do agree. My hon. Friend makes an important point about the role of police and crime commissioners. They will indeed be the voice of local policing, and I am sure that as such they will want to ensure that police officers are spending as much of their time fighting crime—and not doing paperwork—as they can, and that they will be a powerful force in removing bureaucracy from the police.
Keith Vaz (Leicester East) (Lab)
In evidence to the Select Committee, the chief constables of the West Midlands and Surrey informed the Committee that £5 million had been allocated to work with the private sector in order to cut costs and reduce administrative burdens. Given what happened at the Police Federation conference last week, would it not be a good idea for the Home Secretary to sit down with all the stakeholders to discuss exactly what the role of the police should be in the 21st century, rather than there being a public dispute between the Government and the police?
Mrs May
I have made it absolutely clear that the focus of the police is on fighting crime. I have set them only one target, which is to cut crime. Indeed, it is right that forces up and down the country are now looking—as they have done for several years, including under the last Labour Government—at bringing in the private sector to their forces where they feel that functions can be done more cost-effectively by the private sector. But I have also made it clear—as I did at the Police Federation conference last week—that we will not move the powers of warranted officers from officers to the private sector.
Philip Davies (Shipley) (Con)
One of the most pointless, expensive and time-wasting aspects of the bureaucracy that the police have to deal with is the equality and diversity industry that mushroomed under the last Labour Government, which I saw for myself when I visited West Yorkshire police on Friday. Could I meet the Home Secretary or the Minister for Policing and Criminal Justice to discuss how we can streamline this process so that we can get more resources on to the front line?
Mrs May
It is entirely right that we encourage the police to see more diversity in their ranks. There are many ways in which we do want to see more women and people from black and minority ethnic communities joining the police force and being able to press through the ranks, but my hon. Friend makes the important point that in looking at these issues we do not want bureaucratic processes to take over. Either I or my right hon. Friend the Minister for Policing and Criminal Justice will meet him to discuss this.
Mr David Hanson (Delyn) (Lab)
Even if I accepted what the Home Secretary said about the changes in administrative burdens, the reality is that 16,000 police officers are being lost. Last week at the Police Federation conference, they told me that 20% cuts would lead to administrative workloads increasing, not decreasing. Only today, the chief constable of Dyfed-Powys warned of “an austerity crime wave” as a result of the Government’s approach to policing. Will the Home Secretary now recognise that despite any package of policies she takes forward on administration, there will be fewer police on the beat and more administrative work to do?
Mrs May
No, the whole point of the approach the Government are taking is that we are cutting the bureaucracy for police to enable them to spend more time on the beat. The challenge is this: I was willing to go to the Police Federation conference and be absolutely honest with the police about what we are doing. I trust that the message that the shadow Home Secretary and the shadow policing Minister gave to the police was that Labour Front Benchers support the same level of cuts in funding as the Government are putting through, and the impact that that would have. I wonder if the shadow policing Minister told the police about his view that £600 million should be taken out of police overtime.
Tom Brake (Carshalton and Wallington) (LD)
Exempting the National Crime Agency from the Freedom of Information Act will reduce the administrative burden on the police, but will the Home Secretary set out how the principles of transparency and accountability will be upheld in the way that the NCA operates?
Mrs May
I am happy to give my right hon. Friend what I hope will be reassurance on this issue. We are clear that the NCA, when it is set up, should be transparent about how it operates and we will set out clearly those aspects that we expect it to be transparent about and publish information on. However, given the nature of many of the cases that it will deal with and some of the information behind those cases, it is right that we exempt it from the FOI. It is our intention that, on those matters that it can tell the public about, it is as transparent as possible.
Harriett Baldwin (West Worcestershire) (Con)
2. What assessment she has made of the effectiveness of the permanent cap on non-EU work migrants after its first year of operation.
Iain Stewart (Milton Keynes South) (Con)
4. What assessment she has made of the effectiveness of the permanent cap on non-EU work migrants after its first year of operation.
Karen Bradley (Staffordshire Moorlands) (Con)
10. What assessment she has made of the effectiveness of the permanent cap on non-EU work migrants after its first year of operation.
The Minister for Immigration (Damian Green)
The annual limit, together with other measures such as raising the minimum skills level, has ensured that we have kept the numbers of non-EU workers at sustainable levels while allowing employers to access the brightest and best migrants.
Harriett Baldwin
The seasonal agricultural workers scheme, which expires in December 2013, allows farmers and growers to bring in workers from as far away as Ukraine and Moldova. Does the Minister agree that welfare reform should make it more attractive for British crops to be picked by British workers?
Damian Green
My hon. Friend makes a good point. Immigration reform is one necessary element of creating a more balanced labour force, but the other two elements are welfare and educational reform, which will ensure that British workers are trained and have the right attitude to take the jobs available, in agriculture or in other sectors. [Interruption.] The Opposition Front-Bench team appear to deride these types of jobs. I suggest that is a big mistake.
Iain Stewart
I welcome the new income and language criteria introduced alongside the cap. Does the Minister agree that these measures give the public confidence that economic migrants are here to benefit the economy and contribute to society?
Damian Green
It is important that we create, as we are doing, a more selective immigration system designed to attract and reward migrants who can make the biggest contribution to our economy. By raising the minimum skills threshold and the English-language requirements, we have ensured that only migrants who are highly skilled or who have skills that are in short supply can come to the UK to work and settle.
Karen Bradley
Of course, immigration is not just about those coming but about those leaving the country.
Karen Bradley
I apologise; I meant migration. Will the Minister tell the House what the Government are doing to break the link between coming here temporarily and settling here permanently?
Damian Green
One of the many failures of the previous Government was that they made settlement an automatic consequence of five years’ residence in the UK. Settlement in the UK is a privilege, not a right, and unrestricted settlement rights are not in the UK’s best interests. The changes we implemented in April will mean that, from April 2016, those wishing to settle here will have to earn a minimum salary of £35,000 or the appropriate rate for the job, whichever is higher. That is better for the long-term health of our immigration system.
Mr Frank Field (Birkenhead) (Lab)
Given that the Government have just released data showing that one in five unemployed households contain a member who has never had a job, is there not a case, while this recession lasts, for temporarily restricting movement generally from Europe, so that the Government’s welfare reforms can have a fair wind?
Damian Green
I have great admiration for the right hon. Gentleman’s work on immigration and welfare, but I do not think that closing off the European labour market would be appropriate in a recession, because it would presumably apply both ways, meaning that British workers looking for jobs in the rest of the EU would also be badly affected. He is quite right to suggest, however, that the problems of the British economy need to be solved at the same time as the severe problems in the eurozone.
Fiona Mactaggart (Slough) (Lab)
My impression is that the fact that companies have never reached the cap in the number of available work permits suggests that it is not the Government-imposed cap that has affected this. One consequence that I see is that companies are exporting the work that would have been done in the UK to other countries, or using intra-company transfers. What is the Minister doing to ensure that we keep work in Britain?
Damian Green
First, we are putting limits on intra-company transfers—limits that were never there under the previous Government. We have set a minimum salary threshold of £40,000 for those who stay for longer than one year and a minimum salary of £24,000 for those who stay for less than one year. The hon. Lady identifies a potential problem, in that people could use intra-company transfers to try to drive out British workers, but that is precisely why we have taken these effective measures—to stop that kind of abuse of the system.
Mr Denis MacShane (Rotherham) (Lab)
18. Is the Minister concerned that France now attracts 50% more visitors from India than we do and that Switzerland, which has joined Schengen, is also experiencing a disproportionate surge in business visitors and tourists as a result? Is it reasonable to impose a £78 visa charge? People have to travel hundreds of miles to visit Britain for any reason. We might be open for business, but we are jolly well closed to foreigners under this Government.
Damian Green
I have to say that that is complete nonsense. Our tourism industry is doing better than ever before. Somebody planning to fly here on holiday from India would have to pay £78 for a six-month visa, which would not be an even remotely significant part of the total cost of their holiday, so I have to say that the right hon. Gentleman has simply got it wrong.
Jason McCartney (Colne Valley) (Con)
3. What steps she is taking to tackle alcohol-related antisocial behaviour.
Anne Marie Morris (Newton Abbot) (Con)
8. What steps she is taking to tackle alcohol-related antisocial behaviour.
The Secretary of State for the Home Department (Mrs Theresa May)
On 23 March, I published the Government’s alcohol strategy, which set out radical proposals to tackle the harms caused by alcohol misuse and builds on the legislative steps we have already taken to give the police and local communities more powers to tackle problem premises and deal with late-night drinking problems.
Jason McCartney
Will my right hon. Friend introduce measures to encourage safe and responsible drinking in community, family-friendly pubs, rather than pre-loading at home on cheap bargain booze?
Mrs May
I know that my hon. Friend has long championed the cause of rural pubs in particular, and pubs that are a key part of their local communities. One of the proposals that we have put forward in the alcohol strategy, on which we are consulting, is the introduction of a minimum unit price, as well as banning bulk discount offers. We believe that both will have a significant impact on preventing people from pre-loading—which is so often a lot of the problem—after buying cheap alcohol from supermarkets. Those measures will have a real impact in helping friendly, local, well-run community pubs.
Anne Marie Morris
Alongside one of my local town councillors, I am working on a Safer Streets campaign in Newton Abbot, which will involve our asking local businesses to become safe havens for those who encounter antisocial behaviour in the town centre. Does the Minister agree that such schemes are effective in creating a safe environment for businesses to thrive, while also helping our attempts to deal not just with alcohol-related incidents but with all forms of antisocial behaviour?
Mrs May
My hon. Friend is absolutely right, and I commend those in Newton Abbot who have put forward the scheme and are putting it in place. I think it will have a real impact. We see responsible businesses coming together with local agencies in a number of towns and cities around the country to provide people with safe drinking places, which will ensure that we can reduce alcohol-related violence and antisocial behaviour. The evidence from many places—including Durham, for example, which put forward such a plan—is that such schemes are good for the local economy, as well as for reducing crime.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
When those responsible for antisocial behaviour are arrested, they should surely be dispatched to the police cells as quickly as possible. Does the Home Secretary therefore share my disappointment at the Metropolitan police’s decision to close all the cells at Harrow police station, leaving us with no cells at all—we are one of the few London boroughs in that position—and causing significant logistical and administrative problems for the police in Harrow?
Mrs May
It is a matter for the Metropolitan police how it chooses to arrange the provision of cells and operational matters on the ground. It is for the police to decide operational matters because they have operational independence—something that I would have thought the hon. Gentleman supported.
Emma Reynolds (Wolverhampton North East) (Lab)
The Government might talk tough on tackling antisocial behaviour, but their policies do not live up to that rhetoric. Will the Home Secretary explain to my constituents why the Government are weakening powers to tackle antisocial behaviour and, in particular, why their replacement for antisocial behaviour orders does not constitute a breach of a criminal record?
Mrs May
We are not weakening the powers to deal with antisocial behaviour. What we have proposed—I will be publishing a White Paper on this tomorrow—will ensure that it is easier for people at the local level, including the police, local councils and others, to exercise powers on antisocial behaviour. Crucially, for the first time we are also giving individuals and communities an opportunity to trigger action to ensure that when there is long-standing antisocial behaviour that has not been dealt with, action must be taken.
Dr Sarah Wollaston (Totnes) (Con)
Will the Home Secretary join me in paying tribute to the work of special constables in tackling antisocial behaviour associated with alcohol? A group of special constables from Brixton are in the Gallery today. Between them they have put in more than 680 hours of voluntary work, and they are quite clear that the bulk of antisocial behaviour is associated with alcohol and/or drugs.
Mr Speaker
The sentiment is greatly appreciated, but just for future reference, we do not in this place refer to the Gallery, no matter how distinguished or worthy the people in it are.
Mrs May
I value the work done by special constables. There are many examples, like the one my hon. Friend cited, of special constables actively working in the community to reduce antisocial behaviour. Special constables do a good job all the time, so I would encourage more people to become special constables, which is a valuable way of volunteering and giving a great deal back to local communities.
Gloria De Piero (Ashfield) (Lab)
Breach of an ASBO is a serious business. That is why it is a crime. Will Ministers confirm that a breach of their proposed replacement—the crime prevention injunction—will not be a criminal offence?
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
5. What recent assessment she has made of the effectiveness of UK border controls.
The Minister for Immigration (Damian Green)
Security of the border is our top priority. In February, the independent chief inspector published his report into border security checks last summer. We have accepted all the report’s recommendations, and we are implementing important changes to improve the effectiveness of UK border controls.
Tom Greatrex
I thank the Minister for that reply, but given that up until as recently as last week people are waiting up to three hours to come into the country through Heathrow, should not the Minister, instead of accepting whatever this week’s excuse is—whether it be the royal wedding, the snow, the rain, the wrong type of rain or the wrong type of wind—accept that it is his responsibility, and get on and sort the problem out before the Olympics?
Damian Green
I am happy to assure the hon. Gentleman that we have already introduced more staff at peak times and established mobile teams that can be moved around. Within a couple of weeks, a new control room will be operating at Heathrow, which will enable us to have better real-time information about what is happening in each of the terminals. We are already seeing considerable improvements. If the hon. Gentleman does not want to take that from me, he should take it from Colin Matthews, the chief executive of BAA, who said at the Home Affairs Select Committee last week:
“we can detect some improvement in the last week or so since that announcement was made.”
Mr James Clappison (Hertsmere) (Con)
Will the Government take a look at the case for restoring the discretion of immigration officers in countries of origin—a discretion that was undermined by the previous Government, who made it all too easy for the wrong people to enter the country?
Damian Green
Yes, I am happy to give my hon. Friend the assurance not only that we will do that, but that we already are doing it. We have instituted a pilot scheme for extended interviewing in some countries, showing significant positive results in ensuring that people cannot get on a plane to this country if they do not have the right to do so.
Sajid Javid (Bromsgrove) (Con)
6. If she will bring forward proposals to amend the immigration rules to prevent misuse of article 8 of the European convention on human rights.
Mr Stewart Jackson (Peterborough) (Con)
7. If she will bring forward proposals to amend the immigration rules to prevent misuse of article 8 of the European convention on human rights.
Mr David Evennett (Bexleyheath and Crayford) (Con)
20. If she will bring forward proposals to amend the immigration rules to prevent misuse of article 8 of the European convention on human rights.
The Secretary of State for the Home Department (Mrs Theresa May)
By this summer, we will have in place new immigration rules, which will help to end abuse of article 8. The Government are considering responses to the public consultation on changes to the family migration rules carried out last year, and expect to announce the results shortly. This will include changes relating to article 8.
Sajid Javid
The UK Border Agency recently reported that almost 4,000 foreign criminals are free to walk our streets. My Bromsgrove constituents know that it was the previous Labour Government who put the rights of criminals before the rights of ordinary law-abiding citizens. What steps does my right hon. Friend plan to take to start deporting these criminals?
Mrs May
My hon. Friend rightly raises an issue that causes considerable concern to members of the public. We have changed the way in which we deal with foreign national offenders. We now start deportation action 18 months before the end of the sentence, and in order to speed up the process we are chartering more flights to remove foreign offenders, but we are indeed having to make good a system that was of course put in place by the last Labour Government. When we deal with article 8, we will ensure that it provides less reason for people to claim that they need to remain here in the UK.
Mr Stewart Jackson
The abuse of article 8 undermines faith not only in our own criminal justice system but in human rights generally, as envisaged by the original British jurists who founded the convention in 1946. Will my right hon. Friend confirm that the Government will hold true to the Brighton declaration and make it clear that the sovereignty of our Parliament and our UK courts must be sacrosanct?
Mrs May
As my hon. Friend knows, we are making a number of efforts to ensure that the operation of the European convention in relation to the United Kingdom and the United Kingdom courts is as we believe it should be. That does indeed entail the decisions made at the Brighton conference concerning changes in the operation of the European Court of Human Rights. It also involves what we are doing to clarify the fact that article 8 is a qualified right and not an absolute right.
Mr Evennett
There is real concern in my constituency about appeals being lodged under article 8 allowing people to remain in the UK longer without leave to remain. Does my right hon. Friend agree that changes in article 8 will complement the Government’s changes to the family route of settlement policy, and will prevent further abuse of the system?
Mrs May
Yes. That is why the Government will be making changes in the family migration route along with their changes to article 8. Given that article 8 is about the right to a private and family life, the two are relevant to each other. What is crucial, however, is that article 8 is not an absolute right. It is qualified, and it allows the Government to operate a system under which people do not have an automatic right to stay here for the purposes of a family life. We want our courts to operate article 8 in the way in which it is written in the convention.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I listened carefully to what the Home Secretary said about changes that might be forthcoming. Does she believe that decisions should be made in a timely manner? My constituent Daniel Omonkhua was told by the UK Border Agency back in October 2010 that his article 8 application would be determined within a month. Why is he still waiting a year and a half later?
Bill Esterson (Sefton Central) (Lab)
9. What assessment she has made of the effect of change in police numbers on the level of crime since May 2010.
Huw Irranca-Davies (Ogmore) (Lab)
16. What assessment she has made of the effect of change in police numbers on the level of crime since May 2010.
The Minister for Policing and Criminal Justice (Nick Herbert)
The Home Affairs Committee said last year:
“We accept that there is no simple relationship between numbers of police officers and levels of crime.”
The Government agree.
Bill Esterson
There are 385 fewer front-line police officers in Merseyside than there were in March 2010. According to the British crime survey, there has been the biggest increase in recorded crime for a decade. People in Merseyside could be forgiven for thinking that there was a link between the two. Will the Minister now stand at the Dispatch Box and deny the existence of that link?
Nick Herbert
I have already quoted the Select Committee’s view that there is no simple link. However, I can tell the hon. Gentleman that according to the latest official figures relating to crime in Merseyside, published earlier this year, in December last year overall crime had fallen by 2% and the number of instances of violence against the person had fallen by 7%. There are areas of specific concern, but it is not true to say that overall crime has been rising in the hon. Gentleman’s police force area.
Huw Irranca-Davies
The Minister said that there was “no simple link”. The Police Federation has suggested that by 2015 the number of serving police officers in Wales will have fallen by about 1,600, and according to Her Majesty’s inspectorate of constabulary the figure is closer to 800. Even if the more cautious figure were correct, does the Minister really believe that a drop of 800 would have no effect whatsoever on crime in Wales?
Nick Herbert
The hon. Gentleman ought to ask what police officers are doing. If they are tied up in red tape, as they were by the last Government, or if they are in back-room positions in which they do not need to be, that is not necessarily the best possible deployment of resources. The latest official figures show that in south Wales overall crime has fallen by 7%, and at the end of last year the chief constable of south Wales said:
“We are not just treading water, we are improving the service and improving the way that we deal with members of the communities we serve.”
Robert Halfon (Harlow) (Con)
Is my right hon. Friend aware that the number of burglaries in Harlow has fallen by 15% in the past year, and that similar results have been produced by many other crime indicators? That is thanks to not just the excellent work of Essex police, but the work of community organisations such as Harlow Street Pastors which are doing so much to reduce crime.
Nick Herbert
I congratulate Essex police on that achievement. Up and down the country, police forces are showing that, despite having to make savings, they are continuing to reduce crime. What matters is the effective deployment of resources to ensure that we maximise the use of the sworn officer.
Andrew Bridgen (North West Leicestershire) (Con)
Overall crime is down in my constituency, with a massive drop in antisocial behaviour. However, repeat antisocial behaviour can destroy the quality of people’s lives. What steps is my right hon. Friend taking to ensure that the police act in such circumstances?
Nick Herbert
Tomorrow my right hon. Friend the Home Secretary will launch the Government’s proposals to combat antisocial behaviour, strengthening the powers available to the police to deal with antisocial behaviour and giving citizens greater power to tackle repeat antisocial behaviour that they feel insufficient action is being taken to address.
Diana Johnson (Kingston upon Hull North) (Lab)
The Home Secretary has frequently claimed that her 20% cuts to police funding will not reduce front-line policing. I am sure we all agree that 999 first responders, including traffic, CID and neighbourhood police, are, indeed, front-line officers. Will the Minister therefore confirm that recent freedom of information requests show that front-line police numbers have fallen by 5,261 since March 2010?
Nick Herbert
Why does the Labour party never admit that its proposed spending reductions of over £1 billion would also result in a reduction in the police work force, and why does it also never admit that it supports the two-year pay freeze, and that the right hon. Member for Delyn (Mr Hanson), the shadow policing Minister, supports further savings to the police budget, which means it is committed to a greater saving than we are? That is a fact, and the hon. Member for Kingston upon Hull North (Diana Johnson) should attend to the real issue, which is that there have been 25,000 police officers in backroom positions rather than on the front line. We are seeking to redress that.
Robert Flello (Stoke-on-Trent South) (Lab)
11. Whether her Department has carried out an impact assessment on removing the deterrent of a criminal record in dealing with antisocial behaviour.
The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
No, because we are not removing the deterrent of a criminal record in dealing with antisocial behaviour.
Robert Flello
I thank the Minister for that interesting answer. Under Labour, antisocial behaviour was driven down and my constituents saw the real benefit. With front-line policing now being hit by Tory cuts, my constituents are facing a weakening of powers to tackle antisocial behaviour, despite the spin we heard a moment ago. In drafting the upcoming White Paper, will the Minister acknowledge that public confidence is low and a weakened rebranding of antisocial behaviour orders is the wrong priority at the wrong time?
James Brokenshire
It may not surprise the hon. Gentleman to learn that I do not share his characterisation of the antisocial behaviour measures on which we have been consulting. The criminal behaviour order would carry a tough criminal sanction for breach, and other measures, such as the crime prevention injunction, are about having speedier justice to bring relief to communities. These measures are about strengthening the response to antisocial behaviour, not weakening it. The hon. Gentleman will see that when the White Paper is published tomorrow.
Mr Julian Brazier (Canterbury) (Con)
Does my hon. Friend agree that one of the best ways to strengthen the impact of antisocial behaviour legislation would be to extend the welcome category of offences that he and my right hon. Friend the Home Secretary are considering for which the police can themselves prosecute, without having to go through all the bureaucracy of the Crown Prosecution Service?
James Brokenshire
I absolutely agree. This is about reducing bureaucracy and giving discretion to the police to be able to get on and conduct such charges. My right hon. Friend the Home Secretary is examining precisely that issue and the relevant offences which may apply.
Ann Coffey (Stockport) (Lab)
Stockport Homes is very effective in dealing with antisocial behaviour by its tenants, using a number of measures made available under legislation introduced by the previous Labour Government. Does the Minister agree that civil orders and injunctions should still be available to social landlords, on application, in any future proposals?
James Brokenshire
I agree with the hon. Lady about the role social landlords can play in dealing with antisocial behaviour. Injunctions and civil orders are important tools. We are looking at how to extend them, and to make them more flexible and speedier, so as to bring relief to social tenants and others who are victims of antisocial behaviour.
Nicholas Soames (Mid Sussex) (Con)
13. What recent reports she has received on the time taken to enter the UK through Heathrow airport; and if she will make a statement.
The Minister for Immigration (Damian Green)
I receive daily reports on queuing times at Heathrow. Our sampling of queues shows that the vast majority of European economic area passengers at Heathrow pass through immigration control quickly. However, queue lengths have on occasions reached unacceptable levels and we introduced a range of measures to combat this.
Nicholas Soames
May I welcome the steps that my hon. Friend has taken to improve this situation? However, does he agree that all other law enforcement agencies, including the police and the Revenue, use risk assessment in the normal planned course of their business? As security is such a major issue, will he assure this House that every available desk at Heathrow will be manned at busy times?
Damian Green
My right hon. Friend will know that we have introduced more staff, as well as the range of other measures that I mentioned in answer to an earlier question. BAA—and the airlines themselves, including the head of safety and security at Virgin Atlantic—has said that we have seen some improvement in the last few weeks. I am also able to assure my right hon. Friend and the House that more people are working there this week than last week, and that there will be more next week. As the summer gets busier and busier, there will be an increasing number of staff on the desks.
Chris Bryant (Rhondda) (Lab)
I thought that the whole point of hosting the Olympics was to try to increase the number of visitors to this country. Our anxiety is not just about the queues now, but about the queues when the Olympics are over. There is one thing that the Minister just does not seem to grasp, so let me ask him a very simple question, which a schoolchild could answer: if it takes 400 passengers 60 minutes to pass through 10 manned controls, how long would it take those passengers to pass through if the number of controls is cut by 20% to eight?
Damian Green
I can tell the hon. Gentleman about the Olympics, as he is, for once, right about that. I, too, am concerned about what happens after the games. That is why I announced last week that we are bringing forward the recruitment of the first wave of people who will be needed for terminal 2 when it reopens, so that they will be available after the Olympics. We will have extra people at the border not only up to and during the Olympics, but after the Olympics. I am happy to tell the hon. Gentleman that his concerns have been fully met.
Mark Pawsey (Rugby) (Con)
14. What recent assessment she has made of the preparedness of the police for the London 2012 Olympics.
The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
The Government and everyone involved are focused on delivering a safe, secure and successful games. We are confident about police preparations, which are at an advanced stage of readiness and are on track for the Olympic and Paralympic games.
Mark Pawsey
I thank the Minister for his reassuring words. To ensure a safe Olympics, it will be important for the police to work closely with other blue light services, such as the fire and ambulance services. What discussions have taken place on collaboration between all the emergency services?
James Brokenshire
I thank my hon. Friend for his question, and I know that as chair of the all-party group on emergency services he takes a keen interest in these issues—indeed, I understand that he recently arranged a visit to the Olympic park. I can assure him that the Home Secretary has chaired various cross-governmental meetings with ACPO, the fire service and the ambulance service to ensure that there is a strong and co-ordinated blue light response, enhancing our emergency services.
Kevin Brennan (Cardiff West) (Lab)
Of course, the 2012 Olympics are not only taking place in London; many events will also be held in Cardiff, including the first one, before the opening ceremony, at the millennium stadium. What consultation has the Minister had with South Wales police to make sure that people attending the Olympics in Cardiff and other cities across the country have just the same level of safety as will be enjoyed in London?
James Brokenshire
The hon. Gentleman is right to highlight the connections; indeed I visited Weymouth last week to examine the preparations for the Olympic sailing event, which we are very much looking forward to there. The police and the national Olympic co-ordinator have been actively bringing the police response together. We have been testing and carrying out exercises, and focusing not simply on London, but on all parts of the country involved in the Olympic games. We look forward to celebrating them very much.
Jeremy Corbyn (Islington North) (Lab)
15. How many children and their families are being held in immigration detention.
The Parliamentary Under-Secretary of State for the Home Department (Lynne Featherstone)
During 2011, 99 children entered immigration removal centres, short-term holding facilities and pre-departure accommodation, which compares with 436 in 2010 and with 1,119 in 2009. The numbers held at any one time in 2011 were very low; snapshot figures from the end of each quarter ranged from zero to one child.
Jeremy Corbyn
When the coalition Government made their unequivocal statement in May 2010 that they would end all
“detention of children for immigration purposes”,
many of us welcomed that, because we had always thought such detention to be wrong. Will the Minister therefore explain what response she has given to the Refugee Council’s “Not a minor offence” report, which describes the detention of unaccompanied children arriving in this country from Afghanistan, Iran or Iraq? These children arrive deeply disturbed and very frightened, and they find that their first interaction with this country is to be put in detention and kept there. Will she please guarantee that no more children will be kept in detention, and that instead cases will be referred to the relevant local authority immediately where children arrive in this country?
Lynne Featherstone
The hon. Gentleman raises the issue of the report by the Refugee Council that was published this morning. Obviously, we will consider the Refugee Council’s recommendations as we continue to improve at all levels, but I point out to the hon. Gentleman that under the Labour Government it was 28 days before Ministers got involved, whereas under this Government it is 72 hours.
Mr Philip Hollobone (Kettering) (Con)
What happens to families who are claiming asylum in this country having passed through other safe countries before getting here? Are we returning them to the last safe country that they left or do we offer them the opportunity to stay in this country indefinitely?
Lynne Featherstone
We return where we can, obviously, but the important point is that we have a process for returning and we follow it.
Lisa Nandy (Wigan) (Lab)
Many of the children whom the Minister describes are age-disputed young people. Will she confirm that the appalling and shambolic X-ray pilot—described as “appalling” by the four UK Children’s Commissioners and subsequently abandoned—will not resume and that she will work with children’s professionals and medical experts to find an effective solution to the very difficult problem of determining the age of children?
Lynne Featherstone
The hon. Lady might or might not know that, in light of the view expressed by the National Research Ethics Service that that trial is research and therefore requires NRES approval, we have paused it while we work with our partners to seek formal ethical approval.
Mark Lancaster (Milton Keynes North) (Con)
17. What recent assessment she has made of any link between sales of the drug khat and serious organised crime; and if she will make a statement.
The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
The Government are currently reviewing the case for control of khat under the Misuse of Drugs Act 1971. The Advisory Council on the Misuse of Drugs will consider all available evidence, including any links with serious organised crime. Its advice will inform the Home Secretary’s decision.
Mark Lancaster
The UK will shortly become the only legal port of entry for the drug khat in western Europe, so what steps will the Government take to ensure that the UK does not become a drug smuggling hub for the rest of Europe?
James Brokenshire
I know that my hon. Friend has followed this issue with close interest. The Government are monitoring the situation carefully and seeking evidence from the Serious Organised Crime Agency and others to inform the advice of the Advisory Council on the Misuse of Drugs. That advice is due in October, earlier than expected, and we will form our final decision on the basis of that.
Paul Flynn (Newport West) (Lab)
Will the Minister study the evidence that every ban on every new drug since 1971 has resulted in an increase in that drug’s use? A ban on khat will not only increase its use but drive a wedge between the police and the Somali and Yemeni communities. Is this a sensible idea?
James Brokenshire
We will form our decision based on the evidence and the information provided by the Advisory Council on the Misuse of Drugs. I do not accept the hon. Gentleman’s characterisation; bans can be very effective. For example, part of the problem with legal highs has been that young people have been taking them because they equated legality with safety. That is why we have taken action in that sphere and we will continue to take action on the legal framework.
Andrew Selous (South West Bedfordshire) (Con)
21. What recent steps she has taken to eradicate human trafficking.
The Parliamentary Under-Secretary of State for the Home Department (Lynne Featherstone)
In 2011, the Government published their human trafficking strategy, opted into the EU directive and improved the support arrangements for adult trafficking victims. Since then we have been working across Government and with stakeholders further to strengthen and improve our approach to tackling human trafficking.
Andrew Selous
Many people believe that trafficking is about foreigners being trafficked into the UK, but do the Government accept the need for great vigilance on the question of British citizens being trafficked within the United Kingdom and outside it, which has recently been shown to be happening?
Lynne Featherstone
Of course, the terrible incident in Bedfordshire highlighted the issue of internal trafficking and the Government have taken action. We recently passed clauses in the Protection of Freedoms Act 2012 to make internal labour trafficking a criminal offence, which will come into force in April 2013. We also made it an offence for a UK national to traffic a person for sexual or other exploitation, regardless of where in the world the trafficking occurs or is intended to occur.
Mr John Spellar (Warley) (Lab)
22. What her policy is on appeals against refusals of applications for visas for short-term visits.
The Minister for Immigration (Damian Green)
Genuine visitors will always be welcome to visit the UK. Only the family visitor route currently offers a right of appeal. Subject to parliamentary approval, that will be removed by 2014.
Mr Spellar
That reply will be heard with very considerable concern and anger in many communities across the country. Families who are trying genuinely to have family reunions, weddings and so on are being held up. Does the Minister not recognise that the main problem is that the appeals process is jammed up because of the low level of decision making in the UK Border Agency and the stubborn refusal of managers to review that, saying that it will be sorted out in the appeals system? I have letters to that effect. Why does not the Minister address the issues and look after the community?
Damian Green
I am addressing precisely those issues. Clearly, the right hon. Gentleman missed the first part of the answer—genuine visitors will always be welcome to visit the UK. The current appeals process takes around eight months. Re-applying takes about 15 days, so it is quicker and easier for people to apply again. The current visit visa appeal system costs about £29 million a year to administer—money that could be much better spent on other parts of the immigration system.
Stephen Hammond (Wimbledon) (Con)
T1. If she will make a statement on her departmental responsibilities.
The Secretary of State for the Home Department (Mrs Theresa May)
On 10 May we introduced in the other place the Crime and Courts Bill, which will establish the National Crime Agency. The NCA will be a powerful operational crime-fighting agency which will defend our borders, fight serious and organised crime, tackle economic and cybercrime, and protect children and vulnerable people. I will be further discussing the workings of this important new agency when I meet representatives of the Association of Chief Police Officers later this week.
Stephen Hammond
The weekly e-mail from Commander Williams showed that crime in Merton and Wimbledon was falling again last week. Residents of the Wimbledon constituency rightly attribute that to the Mayor of London ensuring that police numbers were kept up during his first period of office, so what can the Home Secretary say to the residents of Merton who want to ensure that the police can recruit the brightest and the best talent?
Mrs May
That was one of the issues that Tom Winsor looked at in the second part of his review of pay, terms and conditions for police, and he has proposed a number of ways for direct entry at various levels in the police for those from outside the police so that we can see a broader range of experience and skills being brought into policing. Those proposals, like other proposals from the Winsor report part 2, are currently going through the appropriate police negotiating body and other bodies.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
The borders inspector has said that the number of people absconding at border control, slipping through without permission, escaping from detention or disappearing after temporary admission has more than doubled since the election, and the number who are later caught has fallen. Can the Home Secretary explain why that has happened?
Mrs May
We take the issue of security at the border extremely seriously. That is why we have been following up the report of the chief inspector of the UK Border Agency, as his title then was, in relation to the Border Force and ensuring that the—sadly—poor situation that had developed over a number of years under the Labour Government is being addressed.
Yvette Cooper
The problem has got substantially worse since the election. At terminal 3 alone the number of absconders was 115 in 2009; in 2011 the report estimates that it was “between 300 and 350, significantly higher than previous years”, and the proportion being caught later has halved. That is what the report says. Time and again, the situation is getting worse month on month, not better. Is not the truth that this is another example of failing border control and weaker action on illegal immigration on the Home Secretary’s watch? We have controls being downgraded hundreds of times, hundreds of staff being cut and at the last minute re-recruited, drugs and gun checks stopped, and more people like Raed Salah managing to walk through, when they should have been stopped. Will the Home Secretary get a grip?
Mrs May
I say to the right hon. Lady that it is this Government who are putting in place controls on our immigration system; it was the previous Labour Government who allowed people to come in without any controls on the immigration system. We are putting in place a policy that will see the number of people coming into this country reduced and in both the UK Border Agency and the UK Border Force, we are putting right the problems that grew up under the previous Labour Government. She talks about the relaxation of controls, but the inspector said that that had been happening since 2007. It is about time that the Labour party accepted responsibility for what it did in government.
Mr David Ruffley (Bury St Edmunds) (Con)
T4. I commend my right hon. Friend’s steely determination in dealing with Abu Qatada and his slippery legal team, but the fact remains that such a situation might happen again. That man has cost the British taxpayer £3.2 million over the past 10 years. In light of that, will she report what progress she has made in investigating how the Italian Government made early deportations of suspected ne’er-do-wells like Abu Qatada?
Mrs May
I have indeed undertaken, as I think my hon. Friend knows, to look at how deportations are managed in other countries, and not just in Italy but in France which, as has recently been mentioned, was able to deport two individuals rather more quickly than we have been able to deport Abu Qatada. I will report to the Commons when that work is complete. We want to be able to deport as quickly as possible people who should not be in the United Kingdom, and I am pleased that we are now closer to deporting Abu Qatada than we ever have been.
Sheila Gilmore (Edinburgh East) (Lab)
T2. Given that the vast majority of international students leave the UK at the end of their courses, why do the Government insist on counting them when calculating net migration figures, which other countries do not do, to the detriment of institutions such as Edinburgh university in my constituency that are competing with other countries for those students?
The Minister for Immigration (Damian Green)
First, I assure the hon. Lady that there is not a limit on the number of students coming in. The reason we include them in the immigration system is simply that the UN definition of an immigrant is someone who comes to a country with the intention of staying there for more than a year, so any student who comes to stay for more than a year, according to the UN definition, is an immigrant.
Jackie Doyle-Price (Thurrock) (Con)
T5. Of course, controlling immigration does not happen only at our borders; it also involves ensuring that migrants abide by their obligations under immigration rules. With that in mind, what more is being done to tackle the problem of persistent over-stayers?
Damian Green
We have taken action against employers, in particular, as the main reason for people over-staying is in order to work illegally. Last summer we had a big effort against over-staying illegal workers. I am happy to report to my hon. Friend that that is working. The last quarter of 2011 showed an increase in enforced removals and voluntary departures of those who should not be here, on both the previous quarter and the last quarter of 2010, so the effective and tough measures we are taking are now visibly working.
Jack Dromey (Birmingham, Erdington) (Lab)
T7. A 20% cut will see 1,200 police officers go in the west midlands. A further 20% cut in the next comprehensive spending review would mean, in the view of the police service, the end of community policing. Has the Home Secretary told the Chancellor of the Exchequer that, and can she rule it out?
The Minister for Policing and Criminal Justice (Nick Herbert)
The hon. Gentleman knows perfectly well that we are not going to speculate about a future spending review. He might have pointed out that the latest figures show that recorded crime in the west midlands has fallen by 7% overall, and he might have congratulated the chief constable on that achievement, despite the fact that, like every other chief constable, he is having to make savings.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
T6. I, like many other MPs, was horrified and disappointed to receive an e-mail today from the Police Federation implying that Tom Winsor was effectively discriminating against black and minority ethnic applicants to the police. Instead of trying to smear Tom Winsor as a racist, would it not be better for the Police Federation to look at how to increase the number of successful BME applicants?
Nick Herbert
I share my hon. Friend’s view about the e-mail that the Police Federation sent this morning, which included the absurd claim that British policing will be transformed into some kind of paramilitary model, which is palpable nonsense. Tom Winsor’s independent report included an equality statement and the Home Secretary specifically asked the negotiating bodies to consider the impact of his proposals on equality and diversity.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
T9. The crimes of the nine Oldham and Rochdale men convicted of the appalling sexual exploitation of vulnerable and young children have been condemned throughout the community. In Oldham, the police are working across agencies and on Operation Messenger to prevent such attacks, which they say exist across the UK in all communities and in all kinds of homes. What is the Home Secretary doing to ensure that such vital work does not suffer under the police cuts, and will she commit to ensuring that the Government’s response to these crimes is based on evidence, not on a knee-jerk reaction?
Mrs May
The hon. Lady raises a very important issue in relation to the terrible situation that we have seen in Rochdale, but, as she and others have said, sadly we see too many such cases throughout the country of grooming and sexually exploiting girls. We have already had a report from the Child Exploitation and Online Protection Centre on the issue, and we will look at it again and at how it is dealt with across the country. We have made sure that in the Police Reform and Social Responsibility Act 2011 there is a specific duty on police forces and on police and crime commissioners in relation to the care of children.
Karen Bradley (Staffordshire Moorlands) (Con)
T8. Will the Minister join me in congratulating Staffordshire police and, in particular, Chief Constable Mike Cunningham on meeting the requirements of the budget reductions in the spending review while maintaining visible front-line policing?
Nick Herbert
I will happily join my hon. Friend in congratulating Staffordshire police on that achievement. They, like many other forces, have seen an overall fall in crime—in their case, of 7%—despite having to make savings, and the chief constable has made a particular commitment to protect neighbourhood policing.
Nick Smith (Blaenau Gwent) (Lab)
Binge drinking by young people is a serious public health issue. “Men in Black 3” will be on our screens soon, and cinemas are important channels for alcohol marketing, so will the Home Secretary take the lead on more effective controls on advertising in cinemas?
Mrs May
The hon. Gentleman makes a very interesting point. I am not quite sure why he felt that “Men in Black 3” had to be promoted in his question, good though the first two films were. We have looked at the issue of alcohol advertising in relation to the alcohol strategy, but I will certainly take on board his point about cinemas.
Jo Swinson (East Dunbartonshire) (LD)
I thank the security Minister for the interest that he has taken in the superfluous security fencing at Milngavie reservoir since I raised the issue with him in 2010. Can he confirm that the Home Office has now acted, along with the Centre for the Protection of National Infrastructure, to give Scottish Water the power to remove any unnecessary and unsightly security fences?
The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
I am grateful to the hon. Lady for highlighting that important constituency issue. As she knows, the Centre for the Protection of National Infrastructure has reassessed the site following the installation of a water treatment facility and confirmed the security measures, and I can confirm that I have signed the necessary direction.
Paul Goggins (Wythenshawe and Sale East) (Lab)
As the Minister responsible for national security, will the Home Secretary provide us with her understanding of the comments made yesterday by the Justice Secretary, who told the BBC that he has revised his proposals for closed material proceedings in civil cases so that judges always have the final say on when they are used?
Mrs May
The right hon. Gentleman will see the Government’s proposals when the relevant Bill is published, but I am sure that with his wealth of knowledge and experience he will know that, on a number of issues such as control orders in the past and terrorism prevention and investigation measures now, the decision to hear such matters in closed proceedings, and the decision on whether they should go ahead, is initially taken by the Secretary of State and then put to the court for the court to agree.
Mr David Davis (Haltemprice and Howden) (Con)
In recent times there have been a number of controversial applications to extradite British citizens to the United States, including that of Mr Christopher Tappin. Some appear to have been based on American police sting operations on British soil. How are they approved, and how many have been approved in recent times?
Nick Herbert
I appreciate my right hon. Friend’s concern about the matter. Operational activities such as covert investigative action would have to be approved in this country by the relevant law enforcement agency. As to the types of investigation, the approval processes and the numbers, I am about to write to my right hon. Friend, and I will set them out in detail for him.
Hugh Bayley (York Central) (Lab)
Does the Minister share my concern that the former chief constable of North Yorkshire, having been deemed guilty of serious misconduct, was nevertheless paid £250,000 in compensation when the police authority decided not to extend his contract? Will the Minister take some action to stop the use of public money in this way? How many police officers would £250,000 pay if the money had been used for that instead?
Mr Speaker
I did not realise that the hon. Gentleman still had two thirds of his important question to go. I apologise for almost stopping him in his tracks, but I should know that nothing can stop the hon. Gentleman in his tracks.
Nick Herbert
I share the hon. Gentleman’s concern about that matter. Such a payment is permissible under the current law. Tom Winsor has made recommendations in his independent review relating to the matter, which we are looking at carefully. I can understand that the people of north Yorkshire, and indeed more widely, would be concerned about this payment.
Mr Peter Bone (Wellingborough) (Con)
The Home Secretary can be proud of the fact that adult victims of human trafficking are being looked after better than ever before, but there remains the scandal that some child victims of human trafficking, instead of being put into special safe homes, are returned to local authority care only to be re-trafficked time and again. That scandal needs to be ended; what can be done?
Damian Green
I agree with my hon. Friend, who does a lot of essential work with the all-party group on human trafficking, that re-trafficking is an important issue. However, those who have expertise in looking after children are, by and large, in local authorities, so that is a natural place for children to be put where they can be kept safely. Where there is the problem of re-trafficking, clearly it is for the Government and for local authorities to look at ways of better protecting children from the traffickers.
Heidi Alexander (Lewisham East) (Lab)
In December, the Home Secretary announced a national review of stop and search as used by the police. What progress is being made with that review and when will the report be published?
Mrs May
Initially, I asked the Association of Chief Police Officers to look at good practice in relation to stop and search. It has been doing that, and it is currently putting the results together. Alongside that, similar activity is taking place in a number of police forces, particularly the Metropolitan police, who have been looking at their stop-and-search arrangements and actively working with communities to ensure that this important power remains available to them but that they are operating it in the correct and proper manner.
Speaker’s Statement
Mr Speaker
I wish to make a short statement on a matter of privilege before we move on to the main business. The hon. Member for Maldon (Mr Whittingdale) has written to me concerning the conclusions of the Culture, Media and Sport Committee, as set out in chapter 8 of its 11th report of Session 2010-12, on News International and phone hacking. Having considered the issue, I have decided that this is a matter to which I should allow the precedence accorded to matters of privilege. Therefore, under the rules set out at pages 273 to 274 of “Erskine May”, the hon. Gentleman may table a motion today for debate at the commencement of public business tomorrow, Tuesday 22 May. The hon. Gentleman’s motion will appear on tomorrow’s Order Paper to be taken after any statements.
Employment Law (Beecroft Report)
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Chuka Umunna (Streatham) (Lab)
(Urgent Question): To ask the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk), if he will make a statement on the Government’s plans in respect of the report on employment prepared for the Government by Adrian Beecroft.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
May I apologise to you and to the House, Mr Speaker, for the absence of the Secretary of State? He is currently travelling back from the north of England, where he has been visiting a number of businesses, and will return to the House later this evening.
The Beecroft report was commissioned by the Department for Business, Innovation and Skills as part of the red tape challenge and the employment law review. Mr Beecroft was asked to give his initial thoughts on areas of employment law that could be improved or simplified to help businesses and for the purposes of job creation. The report was intended to feed into the work that the Department is carrying out to review employment laws to ensure that they maximise flexibility and reflect modern workplace practices. That is important to employers and employees. The report was designed specifically to strengthen our international competitiveness in difficult economic times. It is worth noting that the UK is considered to have the third most flexible labour market in the OECD. That is good for jobs, and we intend to maintain that situation.
Mr Beecroft was asked to take a candid look at a wide range of issues. He submitted his report in October last year. Over the past few months, Ministers have been working on the red tape challenge and the employment law review. We are already actioning 17 of the 23 topics that he raised.
On considering the Beecroft report, it was clear that further evidence was required, most notably on the issue of no-fault dismissal for micro-businesses. The call for evidence on that began on 15 March and will conclude on 8 June. Given that that date falls when the House is not sitting, the Government decided to bring forward publication of the report to this week, so that it could inform the debate. Last week, the Home Secretary announced the outcome of the equalities red tape challenge, which impinges directly on employment and workplace issues. Our intention was therefore to publish the Beecroft report this week, in time for Business, Innovation and Skills oral questions.
However, I noticed in the press today that an earlier draft of the report is in circulation. Therefore, in the interests of accuracy and so that the House has the correct information before it, I confirm that I have instructed officials that the report will be published later this afternoon. Copies will be placed in both Houses.
The Government are taking positive action to reform the labour market and to ensure that we can help more people get back to work as soon as possible.
Mr Umunna
What a complete and utter shambles! I understand, as the Minister said, that the Secretary of State is in the north-east today. However, will he explain why the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for North Norfolk (Norman Lamb), who is responsible for employment relations and is the author of this book
“to help you to maximise compensation awards”
in the employment tribunal, is not responding to this question, given that he would appear to be the expert on these matters?
The Secretary of State has called the Beecroft report, which has been promoted by the Prime Minister, “bonkers”. However, on page 3 of the report, Mr Beecroft says that he owes a “debt of gratitude” to the deputy director of labour law at the Department for Business, Innovation and Skills, who helped to produce it. Will the Minister confirm that his Department was complicit and fully co-operated in the production of the report, despite the misgivings of the Secretary of State?
We agree that improvements can be made to the way in which employment tribunals operate, for the sake of employees and employers, but we do not think that watering down people’s fundamental rights at work is a substitute for a growth strategy.
The Secretary of State has said that there is a “reasonably good balance” between workers’ rights and employers’ flexibility. The Prime Minister and the Chancellor, however, suggest that the balance has gone too far in favour of employees. Will the Minister tell us who is determining Government policy in this area—his boss or his ultimate masters in Downing street?
On growth, Beecroft suggests that his recommendations will solve all our problems. However, the double-dip recession that we are in is not a consequence of people’s right not to be unfairly dismissed or of our employment law regime; it is a consequence of the huge drop in demand that has flowed from the loss of business and consumer confidence caused by the Government’s policies.
Is it not the case that putting people in fear of being fired at will, far from promoting growth, will have a huge detrimental impact on consumer confidence? I ask that because Mr Beecroft proposes to give businesses of fewer than 10 employees the power to fire at will through compensated no-fault dismissal. That could affect more than 3.6 million workers in the private sector. Mr Beecroft said:
“The downside of the proposal is that some people would be dismissed simply because their employer did not like them.”
That, he said, was “a price worth paying”. That is wrong. Does the Minister agree?
Does not the noise from Government around this report demonstrate what our business leaders have made very clear: that the Government have lost the plot on growth? Having sought to blame British businesses for the lack of growth, with Ministers telling firms to stop “whingeing” and to “work harder”, the Government now want to blame the hard-working employees in those businesses for the mess that they created. The truth is that they have run out of excuses for tipping the country into a double-dip recession. Everyone wants them to change course to get more people into work. That is what they should concentrate on, not on making it easier to do precisely the opposite.
Mr Prisk
A lot of clichés but not a lot of substance, I am afraid.
The hon. Gentleman asked whether I was complicit in the production of the report. If he had listened to what I said in my statement, he would have heard that the Department commissioned the report. He can use the term “commissioned” or “complicit”, but we still want to check what everyone says.
The hon. Gentleman asked where the employment relations Minister is. He is in the west country, speaking to and working with postal workers, who are keen to hear his views, and so he should be.
The hon. Gentleman asked about the quote including the word “bonkers”. Let us just clarify that, shall we? What the Secretary of State said was that the way in which the current working time directive works is bonkers, and he was right. It operates in such a way as to prevent hard-working people from earning more money. I have no problems in supporting the Secretary of State on that.
The hon. Gentleman then turned to the question of how to develop an economy that can grow more jobs. He may not have spotted the fact that 600,000 new jobs have been created in the past 20 months. There is no simple magic solution, and Government Members understand that although Mr Beecroft has his views, there are others, and we want to listen to them. That is why we have issued a call for evidence and want to consider that evidence.
Last week, I had the privilege of meeting the work force at Vauxhall, where there are to be 700 additional jobs, with a potential 4,000 extra jobs in the supply chain. Why? Because the staff there are prepared to be flexible and work on a modern basis. It is a shame that the Labour party does not understand that.
Mr John Redwood (Wokingham) (Con)
What is the Department’s estimate of the increase in output if all the measures recommended by Beecroft were adopted?
Mr Prisk
I do not have a specific estimate, and that is why we have issued a call for evidence. My right hon. Friend is right to ask about that issue, which the hon. Member for Streatham (Mr Umunna) unfortunately did not mention. We need to understand that there is a cost to every regulatory measure that is brought forth, not only economically but for people on the edge of the labour market who want the chance to have a job. If we regulate them out of work, we have to take responsibility for that, so my right hon. Friend is right to reflect on the costs.
Mr David Winnick (Walsall North) (Lab)
Does the Minister not understand that if the recommendations go forward, it will be an appalling attack on millions of employees? Their basic security at their place of work will be taken away. Is that not characteristic of a Tory-led Government?
Mr Prisk
May I suggest that the hon. Gentleman reads the report this afternoon, looks at what it says and understands what is in it before condemning it? There is a balance to be struck. We need to ensure that we have modern workplaces, but also that we can compete in a world in which there are real pressures. The workers at Vauxhall and elsewhere understand that. I hope that he will read the report, and then we will be happy to have a conversation with him.
Mr William Cash (Stone) (Con)
The Minister is aware that vast amounts of European legislation affect the workplace. He also knows of the Prime Minister’s promises on that matter before the last general election. Will the Minister confirm that we will not merely have a report on the outcome of Beecroft, which has much to commend it, but actually deal with the enormous amount of damage done to small and medium-sized businesses by excessive European legislation, which costs billions of pounds and a huge percentage of our gross domestic product? Will we have action and not just words?
Mr Prisk
I am delighted to confirm to my hon. Friend, who studies these matters very closely and is right that European legislation impinges on small businesses, that we have ensured that there will no longer be gold-plating of directives from Brussels. Just as importantly, we have secured the agreement of the European Commission that small businesses will now be exempted as a point of principle unless the Commission can show that they should not be. We need to make that work, and I hope I will have his support in ensuring that we do.
Mr Dave Watts (St Helens North) (Lab)
May I take this opportunity to apologise to business organisations? When this idea was discussed previously, I said that they were driving it. However, business organisations have been in touch with me and told me that they do not support the proposed legislation.
Mr Prisk
With respect to the hon. Gentleman, Mr Beecroft has submitted his report and we have submitted a call for evidence. Business organisations are now providing that evidence, and when we publish the report later this afternoon they will be able to comment on it. They recognise the value of ensuring that we have modern, flexible workplaces.
Lorely Burt (Solihull) (LD)
I agree with the Minister on the need for balance, but does he agree that we would create a climate of fear in employees by introducing a fire-at-will option, which will not help productivity or growth, and which could be just plain bonkers?
Mr Prisk
Absolutely. We need to ensure we get the balance right so that businesses are competitive and we do not tie them with the red tape they suffered under the previous Government, but as the hon. Lady rightly says, we also need to ensure we do not strip away those basic rights. I understand that and we are sensitive to it, but we need to recognise that we face tough economic circumstances. I want to ensure that everybody who has the opportunity to get a job can do so. Red tape can sometimes make that very difficult to achieve.
Mr John Denham (Southampton, Itchen) (Lab)
What does the Minister think will do most for growth in this country: the introduction of a fire-at-will culture, or tackling the banks that are failing to lend to small business? If the latter, why is there so much more activity from the Government on employment legislation and pathetically little action on getting bank lending going?
Mr Prisk
Sadly, because of the failure of the previous Government, we had to ensure we tackled credit and the problems of red tape so that businesses can grow. Both things are important, as the right hon. Gentleman knows all too well. What matters in that context is ensuring we have the workplaces, access to credit and industrial investment that will enable our businesses to grow. We saw good news last week; I am sorry the Labour party seems unable to reflect on it.
Conor Burns (Bournemouth West) (Con)
Has the Minister had the opportunity to read the World Economic Forum global competitiveness report, which showed that between 1997 and 2011, the UK fell from seventh to 10th in the years when the Labour party was in power? Does he agree that if the Beecroft report leads to a new focus on deregulation and the undoing of the burdens placed on business by the Labour party, it will be welcomed by small business throughout the UK, which we rely on to be the engine of economic recovery?
Mr Prisk
I entirely agree with my hon. Friend, who is right to point out that we need to restore the sad decline in our competitiveness that we saw before the last election. We need to restore not just the Government finances, but the strength of the economy. Ensuring that flexible workplaces and modern work practices are in place is part of that.
Mr Pat McFadden (Wolverhampton South East) (Lab)
There is a flaw in the Minister’s logic. He cannot on the one hand claim credit for the creation of hundreds of thousands of jobs in the private sector, including the welcome announcement at Ellesmere Port last week, and then say there is a huge problem for employers wanting to hire people. Flexibility in labour markets is a good thing, but does he accept that what is really stopping companies hiring is the lack of confidence in economic prospects in this country and the eurozone? In that context, are not the proposals fiddling while Athens burns?
Mr Prisk
It was worth the right hon. Gentleman getting to that metaphor at the end. He is right that confidence is one of the critical issues in the corporate sector. The Government need to understand that, which is why we have ensured that we look at all such issues, whether workplaces or employment tribunals. Government Departments are working hard on those things—they are all important—but he is right that we need to ensure we get the appropriate balance. He says there is surely no problem if we have all those extra jobs, but we must compete in a tough world. I am proud that there are 600,000 extra private sector jobs, but we need more.
Mr Sam Gyimah (East Surrey) (Con)
Does the Minister agree that when we look at employment legislation, we should look not only at no-fault dismissal, but at all such legislation in the round? Activation policies that help people to get into work are as important as focusing on what happens when the relationship between an employer and employee goes wrong.
Mr Prisk
Absolutely. One of the encouraging things about the Beecroft report and other submissions is that they look at the issue in the round, and not just at employment tribunals, and the challenges of Criminal Records Bureau checks and visas. We need to ensure we think about the issue in the round and have an effective work programme alongside that.
Mr Dennis Skinner (Bolsover) (Lab)
Is not this new proposal of stripping employment rights for workers another example of how this Tory and Lib Dem Government are determined to attack workers’ rights while letting the bosses off the hook? Workers have already had a pay freeze and have to work longer for pensions, while the bosses get bonuses and even fatter pensions. Whatever happened to “We are all in it together”?
Mr Prisk
The hon. Gentleman needs to read the report and see what it says. I would also remind him that it is this Government who are ensuring that parents have much better rights. We have put those rights in place because we want to ensure that we balance work and home life. The analysis that he offers is somewhat out of date.
Anna Soubry (Broxtowe) (Con)
As a former shop steward and proud trade unionist, I welcome many of these proposals. Does the Minister agree that we need to change many of our rules and regulations so that, instead of having a “can’t do” culture, we have a “can do” culture?
Ann Clwyd (Cynon Valley) (Lab)
If the Business Secretary has read the report, why did he say to the BBC this morning:
“Britain has already got a very flexible co-operative labour force…We don’t need to scare the wits out of workers with threats of dismissal. It’s completely the wrong approach”?
Mr Prisk
Because, as the Secretary of State rightly points out, we need to ensure that we are able to continue to compete. It is good that we have been able to secure 600,000 jobs in the private sector, but we need more. We are not in the business of trying to scare the workers. We are not somehow trying to rip up their basic rights. We want to ensure that an effective modern economy has the quality and calibre of employees that it needs. That is at the heart of our policies, and I hope that the Opposition will join us and ensure that they do not seek to scare people.
Tony Baldry (Banbury) (Con)
Adrian Beecroft, who is a constituent of mine, has spent a considerable amount of time on this report. Would it not be sensible for right hon. and hon. Members to take the time to read what he has to say before expressing views on a document, the conclusions of which none of them has yet had the opportunity to consider? When they do get around to reading it, perhaps the only test should be whether each recommendation would make the UK more or less competitive.
Jack Dromey (Birmingham, Erdington) (Lab)
Last week, the Secretary of State paid warm tribute to workers and their union, Unite, for their role in the transformation of the automotive industry. This week, the Prime Minister wants to make it easier to sack workers. With 1 million young people out of work, should not the Government concentrate on making it easier to hire workers, rather than to fire them?
Mr Prisk
Again, I appreciate that the hon. Gentleman is at a disadvantage because he has not read the report; the question that he raises shows that rather clearly. If I may, I would suggest that he has a look at it. He will see that we are focusing on how to make the market more flexible so that it is easier to hire people. That is important. He is right about the workers at Vauxhall; they have done a fantastic job and I respect that. That is the attitude of this Government.
John Hemming (Birmingham, Yardley) (LD)
Although the Opposition’s fantasy finance will not solve the growth problems, will the Minister accept that there are supporters of the Government who, when they read the report, will want to see that workers’ rights are protected?
Mr Prisk
Absolutely. That is why I have ensured that the report is published this week, while the House is sitting, out of respect for the House. The call for evidence will close on 8 June, when we are not sitting. I hope that Members will take the opportunity to participate in it; I am sure that the Secretary of State will be delighted to hear from colleagues on the matter.
Andrew Miller (Ellesmere Port and Neston) (Lab)
On the question of clichés versus substance, may I remind the Minister that the deal at Vauxhall was struck under the law as it is, rather than under the law as he would like it to be? Will he therefore list his top 10 priorities for changing the law to make such deals more likely to happen?
Mr Prisk
Mr Speaker, I would test your patience if I were to list the full 10 elements of employment law as the hon. Gentleman requests, but he is right to say that that deal was struck under the current law. We do not live in a static world, however, and we need to ensure that we have examined all the changes in the workplace, whether in a large car plant or a small firm.
George Freeman (Mid Norfolk) (Con)
Does the Minister agree that, when the Government have decided how to respond to the report, it will be important to listen more to the small businessmen and women around the country than to those on the Labour Front Bench—I do not think that any of them have started a business—and to remember that micro-businesses are the key to the growth that we all want to see? Does he acknowledge that too many of our small companies are struggling with big-company legislation, and that well intentioned employment legislation often has the opposite effect, in that it puts employers off taking the risk of employing people and creates a licence for spurious claims at employment appeals tribunals?
Mr Prisk
My hon. Friend is absolutely right. We saw an unreformed employment tribunal system that—as my right hon. Friend the Secretary of State for Energy and Climate Change, who used to be an employment Minister, knows all too well—had failed under the last Government. This Government changed it, and that is a record we can be proud of.
Mr Frank Doran (Aberdeen North) (Lab)
The last Labour Government were just as concerned about flexibility in the workplace as this Government, and the last Government asked the TUC and the CBI to report on what changes needed to be made. Those changes were put in legislation. Both those organisations have the most intimate knowledge of the workplace. What special qualifications does Adrian Beecroft have, as a venture capitalist, to report on the situation in the workplace?
Mr Prisk
Mr Beecroft is an employer. He has a significant record. He works in the marketplace not only as a venture capitalist but as an employer in his own right. He has tremendous business experience. We want to hear all voices; that is why we have a call for evidence. I hope that the hon. Gentleman will contribute.
Mrs Helen Grant (Maidstone and The Weald) (Con)
Does my hon. Friend agree that overt and extreme employment protection can be a disincentive to enterprise and growth, and that that is the case especially for small businesses? I say that as the owner of one.
Mr Prisk
There we have the practical evidence of someone who is actually running a small business. When we put in well intentioned legislation to try to remove every possible risk from the employment market, the greatest danger is that the most vulnerable workers—those on the edge whom it takes a lot of effort to bring into the labour market—can be kept out by such legislation. That is what we always have to bear in mind.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
I hope that the Secretary of State enjoyed his visit to Teesside Cast Products today, itself a control of major accident hazards site and protected workplace. What are the implications of the Beecroft report on chemical and other process industries on COMAH site safety?
Mr David Nuttall (Bury North) (Con)
Last Friday, I met various business leaders from my constituency. One of their major concerns was the complexity of employment law. May I urge my hon. Friend to take whatever action is necessary to simplify employment laws, cut red tape and get the unemployed back to work in my constituency?
Grahame M. Morris (Easington) (Lab)
Does the Minister recognise that one of the fundamental problems with lack of growth is the lack of domestic demand caused by lack of confidence and the unwillingness of employers to invest because of that lack of confidence? Does he think that introducing this fire-at-will concept will do anything to boost domestic consumer confidence?
Julian Smith (Skipton and Ripon) (Con)
Over 50% of Britain’s smallest businesses say that they would hire more staff if they were given greater clarity about how to end an employment relationship. Does my hon. Friend agree that there may be a voluntary third way for no-fault dismissal, and will he meet me and bring along the Secretary of State?
Mrs Jenny Chapman (Darlington) (Lab)
The Minister said in answer to a previous question that confidence is all important. Can he explain for those of us who have not read the report exactly how firing at will will increase consumer confidence?
Mr Prisk
If I may repeat my point, I urge the hon. Lady to read the report. This is not a Government who are in the business of hiring and firing at will. We are about ensuring that employers have the confidence to know that if something goes wrong, they have the ability to unpick that in a reasonable fashion. Many of them are deterred from taking on anyone in the first place, and that is bad for those on the edge of the labour market.
Mr David Burrowes (Enfield, Southgate) (Con)
The Minister will recall that under the previous Government, businesses faced 14 new regulations every working day. May I assure the Minister that, on the Government Benches, we support businesses, want to reduce their burdens and stand on the side of businesses that want to grow and be competitive?
David Wright (Telford) (Lab)
Consumer confidence is low and the housing market is fragile. In towns such as Telford, thousands of public sector workers fear losing their jobs. How does compounding this problem by making private sector workers fear for their jobs help? When will the Government come forward with a definitive statement—they need to do it now—on their position regarding this policy?
Mr Stewart Jackson (Peterborough) (Con)
May I reassure the Minister, not least on behalf of many of my younger constituents, who are unemployed, that Government Members strongly welcome these labour market reforms? Will he take with a pinch of salt the obvious opportunism of the Labour party, which, while in office, doubled the number of households not in work and doubled the number that had never worked?
Mr Prisk
That is the point. Striking a balance is crucial. Not only is my hon. Friend absolutely right but youth unemployment rose by 40% under the previous Government. The Opposition claim that they care about this issue, but caring is not enough; we need to get the law right to ensure that those on the edge of the labour market have the chance to work. That is what we will do.
Chris Evans (Islwyn) (Lab/Co-op)
Is there not a danger that having a different employment regime for workers in small businesses employing fewer than 10 people could be a disincentive to growing that business?
Amber Rudd (Hastings and Rye) (Con)
Fifty per cent. of SME 500 companies were set up during the recession. Now is the time to encourage entrepreneurs. It takes courage, grit and determination to be an entrepreneur. May I urge the Minister to do all he can to help people to set up businesses and create employment?
Mr Prisk
Absolutely. It is crucial to ensure that when we devise employment law we recognise that often those small micro-businesses cannot cope with the kind of well-intentioned red tape that often comes from Whitehall and Westminster. We need to get the balance right. Those are the people in my mind when we devise these laws.
Julie Hilling (Bolton West) (Lab)
Out of the 36 richest countries, Britain is 34th for employment protection. That means it is already very easy to get rid of people in Britain. What evidence does the Minister have that his policy will do anything for growth, rather than making people more frightened of losing their jobs and not spend their money?
Mr Prisk
Again, I urge the hon. Lady to look at the report and talk to employers, who make it clear that the law needs to allow them to take people on in comfort, knowing that if something goes badly wrong, they can change things. This is not only about employment law, however, but about looking at the whole of the workplace. What matters is looking at all the issues in the round and we are working on each of them.
Mr John Baron (Basildon and Billericay) (Con)
A key reason the eurozone crisis is unfolding is that politicians are failing to introduce the sweeping supply-side reforms needed to generate growth and close the gap between what Governments earn and spend. Will the Minister therefore ignore the cries from the Opposition and take a knife to employment regulations, which SMEs believe are the key reason they are not taking on new staff?
Mr Prisk
Ensuring that SME owners have the confidence to take on that next member of staff—perhaps even someone who is not as experienced as they would like—is a challenge and a risk for them, which is why we need to rebalance the law. I am happy, then, to take a knife to bad red tape, but I will ensure that our workplaces are modern and flexible, which is good for both employers and employees.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
Will the Minister concede that given the huge problems facing our economy of a lack of aggregate demand and confidence, further adding to job insecurity, as the report suggests, could make the UK’s recession even worse? People who fear for their jobs do not spend their money.
Duncan Hames (Chippenham) (LD)
What thought has the Minister given to ensuring that no-fault dismissal cannot be applied unfairly so as to discriminate against workers looking to start families, especially young women?
Mr Prisk
This is precisely one of the issues that Beecroft is considering and one that the Department is reviewing. Some good, positive ideas have been presented since we called for evidence on 8 March, and we will continue to reflect on it and seek to strike the right balance.
Fiona O'Donnell (East Lothian) (Lab)
The Minister said that there was always a cost to regulation, but there will also be a cost from weakening employment protection. I suspect that women, especially those with caring responsibilities, will pay a higher price. Will he promise the House that the report and any proposals will be subject to an equality impact assessment?
Mr Prisk
As I said in my statement, we did not progress this matter until the Home Secretary spelled out the equalities aspect last week. The hon. Lady is right: we need to look at the issue in the round. In the end, however, I want to ensure that flexibility in the workplace is paramount. Why? Because for women, being able to balance home and work life is often crucial.
Elizabeth Truss (South West Norfolk) (Con)
In 2005, Germany exempted businesses with fewer than 10 workers from unfair dismissal regulations, as well as introducing a new category of mini and midi-jobs. Since then, youth unemployment has halved and more women have found their way into the workplace. What can we learn from countries such as Germany?
Mr Andrew Love (Edmonton) (Lab/Co-op)
Can the Minister explain the evidence base on which the “fire at will” recommendation has been made? Is the rushed consultation not an admission that there was no evidence and that the recommendation was based on prejudice?
Mr Prisk
I think we need some balance in this debate. We are talking about one element in a report of nearly 25 or 30 different elements, and this idea—“firing at will”, as the hon. Gentleman cavalierly described it—is not something on which the Government intend to proceed. The whole point of having a call for evidence is to ensure that we get things grounded properly. That is very important.
Chris Heaton-Harris (Daventry) (Con)
Any idea that unites the shadow Business Secretary and Lord Oakeshott from the other place has to be worthy of proper thought and attention. I would urge my hon. Friend to consult not only those two individuals, but small businesses in general, because I think he will find a huge amount of support for the ideas contained in the Beecroft report.
Mr William Bain (Glasgow North East) (Lab)
Has the Minister not considered the report by Howard Reed for the TUC two years ago, which concluded that slashing employment protection at work could increase the problems of job creation and decrease productivity? With 6.3 million people desperately trying to find full-time jobs but unable to get them, will the Minister explain how his proposals would increase demand in the economy?
Mr Prisk
With the greatest of respect to the hon. Gentleman, employment law, whether good or bad, does not increase demand in the economy. The important thing is to ensure that employment law enables employers to have the confidence to take people on. That is crucial, and the idea behind the temporary measures that we have had from Labour, which would give perhaps one year or 18 months of support, is complete nonsense.
Bob Stewart (Beckenham) (Con)
A few years ago I ran a small company with 20 employees. One of them was grossly inefficient and incompetent. That person was highly unpopular and should have gone, but I was unable to remove them. It cost a great deal of money and effort, and in the end I failed. I hope that we will get legislation that allows good employers to deal with people like that.
Mr Prisk
The whole point is to ensure that the balance between the employer and employee is struck in a way that enables us to resolve exactly that kind of dispute. It is no good for the hard-working people left in my hon. Friend’s business to see someone who is clearly not able or willing to play their part. We need to ensure that they have the opportunity.
Mrs Anne McGuire (Stirling) (Lab)
The Minister talks about introducing new practices. I would suggest that he is actually reintroducing some pretty old practices, in allowing someone to be dismissed because someone does not like their face. Will he reflect on what he is saying today and think seriously about whether he wants to return to the really bad old days, when people were summarily dismissed for no apparent reason?
Anne Marie Morris (Newton Abbot) (Con)
Is the Minister aware that 70% of the micro-business community are sole traders? When asked why they are sole traders, they say that the prime reason is the complexity and bureaucracy of employment legislation. Does he agree that if we changed the rules as he suggests in the consultation, we would increase the number of jobs and deal with our unemployment problem?
Jonathan Ashworth (Leicester South) (Lab)
Given the falls in consumption in the economy and given the chronic lack of business confidence, would it not be better for the Minister to come to the Dispatch Box to announce some workable schemes to support manufacturing investment and schemes to support business access to financial credit rather than making it easier to sack people?
Dr Thérèse Coffey (Suffolk Coastal) (Con)
When I worked in a large company, it was difficult at times to do what was best for it because of the employment restrictions and the advice of lawyers. Let me provide an example. When we had a redundancy programme, several people were asked to be put out of its scope because of risk, which was unfair on the people who were not in certain special groups as determined by the lawyers. It is that kind of complexity that we need to remove to ensure that employers do what they do best—providing British jobs and growing the economy.
Mr Prisk
My hon. Friend is absolutely right. This is the sort of informed and balanced overall debate that we want. That is why we have called for evidence and why we are publishing this report. The issue should not be about just the clichés we have heard from the Opposition; it should be about making sure that we get the whole workplace right.
Mr David Crausby (Bolton North East) (Lab)
Will the Minister tell me how making British workers terrified of their employers will deliver growth and confidence in the British economy—or is it that the Government simply cannot resist the Tory habits of a lifetime?
Mr Prisk
I wish the hon. Gentleman would read the report and stop using words such as “terrified”. Does he really think that that helps small business owners or people in work? Language like that will be taken up by the media and spun, and I do not think it helps anybody to use that kind of language in half an hour of partisan banter.
Jo Swinson (East Dunbartonshire) (LD)
Some critics of the Government policy to let parents choose how they share parental leave have a view of family life that is, frankly, stuck in the 1950s. They fail to take account of the benefits to business of employing mothers who might be able to return to work more quickly or the benefits to the wider economy of giving parents the flexibility to play a fuller role in the labour market. Whatever is in this report, will the Minister confirm that the Government are committed to introducing shared parental leave, with the benefits it will bring both to families and the economy?
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
Is it not a totally bizarre approach to policy making to publish a report and then call afterwards for evidence to back it up? Does that not confirm the views of many of us, here and outside, that the Government have made up their minds on this issue? The fact is that the Government have not been able to provide a single piece of real evidence to show how this will support economic growth. The questions put on both sides of the Chamber illustrate that this approach is motivated not by policy, but by ideology?
Mr Prisk
No, what the Government do is to set out an agenda and then to seek evidence, which is an important part of the process, on the basis of which policy is made. That is how it should be done—not how it was done under Labour, when policy was made in between the phone throwing at No. 10.
Christopher Pincher (Tamworth) (Con)
The British Chambers of Commerce reckons that the last Labour Government burdened British business with £77 billion-worth of bureaucracy. Does not the attitude of Labour Members, who have not even read the Beecroft report, this afternoon demonstrate that they have learned nothing and forgotten nothing from their time in office, and that they remain viscerally anti-business?
Ian Lavery (Wansbeck) (Lab)
This can hardly be described as an independent report. Beecroft is a paid-up member of the Tory party and he funds the Tory party. When will the constant and continuing barrage of attacks on hard-working people stop and the focus shift to the people who created the problems in the first place—the bankers?
Mr Prisk
There is one slight flaw in the hon. Gentleman’s question. The Department for Business, Innovation and Skills, which commissioned the Beecroft report, is led by the Secretary of State for Business, Innovation and Skills, the right hon. Member for Twickenham (Vince Cable) and then there was his colleague, who is now the Secretary of State for Energy and Climate Change, the right hon. Member for Kingston and Surbiton (Mr Davey). The last time I looked, both were members of the Liberal Democrat party.
Mr Rob Wilson (Reading East) (Con)
Does the Minister agree that employment tribunals are a huge cost not only to business, but to taxpayers who actually fund them. Is it not right that there needs to be more balance in the system so that taxpayers do not have to pay so much and businesses can get on with growing their business?
Katy Clark (North Ayrshire and Arran) (Lab)
There is no international evidence of any connection between the weakening of employment protection and growth. We have yet to see the report, but will the Minister tell us whether it contains any evidence to justify its conclusions, or whether it simply contains the author’s opinions?
Mr Prisk
As my hon. Friend the Member for South West Norfolk (Elizabeth Truss) pointed out a moment ago, Germany has made important reforms recently, and that has helped. We will look at all the evidence. We have a call for evidence, which will close in June, and I hope that the hon. Lady will contribute.
Sheila Gilmore (Edinburgh East) (Lab)
Opposition Members might be more able to discuss the issue if they had read the report. It has been kicking around in Government for several months, but the Government have resisted calls for its publication. Why do the Minister and his colleagues persistently repeat the statement that they have created 600,000 jobs since the election, when the Minister knows that—in the words of his own Prime Minister—the first 500,000 were created in the first six months, and were clearly a result of the stimulus created by the last Government?
Mr Prisk
It is true that 600,000 private sector jobs have been created since the last election, and we are proud of that. However, as the hon. Lady ought to recognise, Governments do not create wealth and jobs but business does, and our job is to ensure that it can do so more confidently.
Mr Speaker
Order. There is a growing phenomenon in the House whereby Members who were not standing at the start of a statement are suddenly motivated to pop up towards its conclusion—but I would not want the hon. Member for Nuneaton (Mr Jones) to be disappointed, so I think we had better hear him.
Mr Marcus Jones (Nuneaton) (Con)
Thank you, Mr Speaker. I recently attended a meeting with people who run small businesses in my constituency. Many of them said that they were keen to take on more employees, but were often put off by the additional red tape and regulation that had been imposed on them by the Labour party. Can my hon. Friend confirm that this Government will take account of the issues raised by my constituents, and will try to help them to create more employment in my constituency?
Kevin Brennan (Cardiff West) (Lab)
Adrian Beecroft is an asset-stripping venture capitalist. Is not putting him in charge of a inquiry into whether it is a good idea to make it easier to sack workers—I mean no disrespect to the absent Business Secretary—a bit like putting Hannibal Lecter in charge of deciding on the nutritional benefits of cannibalism?
Mr Prisk
I hope that the hon. Gentleman has got his press release out, because that is a good joke. However, I think that he should be careful about referring to asset-stripping vultures and so forth. If we want people to develop and create jobs, and to invest in this country, we need to watch our language very carefully.
Paul Flynn (Newport West) (Lab)
Will the Prime Minister demonstrate his new enthusiasm for sacking failures by example and exhortation, and sack the Culture Secretary? A sacking delayed is a disgrace multiplied.
Mr Speaker
I am grateful to the Minister, and to colleagues for their pithy questioning.
Points of Order
Mr Peter Hain (Neath) (Lab)
On a point of order, Mr Speaker. May I thank you personally, and also thank the whole House—whose opinion was expressed in an early-day motion sponsored by the right hon. Member for Haltemprice and Howden (Mr Davis) and my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) in the last Session—for supporting me in connection with the prosecution brought by the Northern Ireland Attorney-General? It is perhaps no coincidence that common sense finally prevailed last week and the Attorney-General dropped the prosecution, but issues of free speech for Members and the ancient offence of scandalising a judge are still unresolved. Will you consider, Mr Speaker, how the House could present proposals to give greater protection to freedom of speech for Members over contempt actions—whether or not statements are made in the House or outside—and make recommendations to the House?
Mr David Davis (Haltemprice and Howden) (Con)
Further to the point of order, Mr Speaker. As you might imagine, since the right hon. Member for Neath (Mr Hain) has been suffering this burden, a number of us have been looking into the possibilities. If you are able to answer the right hon. Gentleman’s question in the affirmative, will you tell us whether the House could also consider recommending legislation to the Government, given that it is almost certainly necessary?
Mr Speaker
I am grateful to the right hon. Member for Neath (Mr Hain) for his point of order, and for notice of it. I am also grateful to the right hon. Member for Haltemprice and Howden (Mr Davis) for his follow-up. Let me first say, for the benefit of both the right hon. Member for Neath and the House, that, as he will recall, my concern was that Members who wish to table an early-day motion upon this matter should be free to do so in terms that reflect their beliefs—and it was then up to them to seek support from other Members of the House, which, indeed, was forthcoming in very substantial number. I note the thanks the right hon. Gentleman has given, but I simply thought I was doing my democratic duty by the House.
Secondly, I may disappoint the right hon. Gentleman by saying the following, but it remains a fact: it would not be for me to recommend any such course of action in relation to the ancient offence to which he referred. That is not a matter for the Speaker, but the right hon. Gentleman, or any other non-ministerial Member, is free to propose legislation by way of a private Member’s Bill. Moreover, the right hon. Members for Neath and for Haltemprice and Howden and other Members are very well versed in the use of the procedures of this House to highlight what they judge to be a continuing omission or an area of policy that requires, let us say, corrective action. Knowing the right hon. Member for Neath and his track record of public campaigning on matters big and small over four decades, I doubt that he will require any further encouragement from the Chair.
Mr David Winnick (Walsall North) (Lab)
On a point of order, Mr Speaker. On 19 March 1997, the House passed a resolution which said, among other things:
“Ministers should be as open as possible with Parliament, refusing to provide information only when disclosure would not be in the public interest”.
Recently, I tabled the following question to the Prime Minister:
“To ask the Prime Minister whether he was aware at the time that on 13 December 2010 Rebekah Brooks had discussed with the Chancellor of the Exchequer News Corporation’s bid for BSkyB.”
If ever there was a question that required a yes or no answer, that was it. I accept entirely that, like your predecessors, you, Mr Speaker, have always said you have no responsibility for ministerial replies—and I am sure you are very pleased about that. However, the Prime Minister replied:
“I had no role in the BSkyB takeover nor did I seek to influence the decision.”—[Official Report, 17 May 2012; Vol. 545, c. 246W.]
I never asked him that; I asked him the question I have quoted. I therefore wonder whether the Prime Minister is in some way in conflict with the resolution passed by the House on 19 March 1997.
Mr Speaker
The short answer to the hon. Gentleman’s point of order is that I am not aware that there is any conflict with the terms of the resolution. As the hon. Gentleman also noted in his point of order, the Chair is not responsible for the content of answers. The obligation upon a Minister is to provide an answer to the question posed. Whether it is an answer of sufficient quality to satisfy Members, and in this instance the hon. Gentleman, is, sadly, another matter. However, the hon. Gentleman may wish to return to this matter, and it is open to him to do so in a variety of ways—which, as he first entered the House 46 years ago last March, he will not require advice from me to identify.
Local government Finance Bill (Programme) (No. 2)
Ordered,
That the Order of 10 January 2012 in the last Session of Parliament (Local Government Finance Bill (Programme)) be varied as follows:
1. Paragraphs 5 and 6 of the Order shall be omitted.
2. Proceedings on Consideration shall be taken in the following order: New Clauses and New Schedules relating to council tax; Amendments to Clauses 8 to 12; Amendments to Schedule 4; New Clauses and New Schedules relating to nondomestic rating; Amendments to Clauses 1 to 7; Amendments to Schedules 1 to 3; and remaining proceedings on Consideration.
3. Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.—(Robert Neill.)
Local Government Finance Bill
19:31 - The House divided: - Ayes: 201 / Noes: 271 - Question accordingly negatived.
21:00 - The House divided: - Ayes: 202 / Noes: 275 - Question accordingly negatived.
21:46 - The House divided: - Ayes: 276 / Noes: 204 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)
I beg to move, That the clause be read a Second time.
Mr Speaker
With this it will be convenient to discuss the following:
Government new clause 10—Power for HMRC to supply information for purposes of council tax
New clause 2—Discounts—
‘(1) Section 11 of the LGFA 1992 is amended as follows.
(2) In subsection (1), for the word “shall”, substitute “may”.
(3) In subsection (2)—
(a) for the word “shall”, substitute the word “may”;
(b) for the word “twice”, substitute the words “a multiple of”.
(4) Omit subsections (3) and (4) and insert—
(a) In this section “the appropriate percentage” and “multiple” are to be determined by the relevant local authority and approved as part of their Council Tax Reduction Scheme as set out in Schedule 1A.
“(b) The eligibility for any reduction shall be determined as part of the Council Tax Reduction Scheme.
(4) Schedule 1 to this Act shall have effect for determining who shall be disregarded for the purposes of discount.”.’.
New clause 5—Report on effects of provisions—
‘At a date no later than three years from the implementation of this Act the Secretary of State shall prepare a report detailing the effects of these provisions on—
(a) the number of people receiving council tax support in each local authority including the number in employment, the number actively seeking work, and the number of pensionable age, and
(b) the costs incurred by each authority in running the scheme, including the cost of appeals.’.
New clause 7—Power to set higher amount for second homes—
‘(1) The LGFA 1992 is amended as follows.
(2) After section 11A insert—
“11C Higher amount for second homes: England
(1) For any financial year, a billing authority in England may by determination provide in relation to its area, or such part of its area as it may specify in the determination, that if on any day a dwelling is a second home—
(a) the discount under section 11(2)(a) shall not apply, and
(b) the amount of council tax payable in respect of that dwelling and that day shall be increased by such percentage of not more than 50 as it may so specify.
(2) The Secretary of State may by regulations prescribe one or more classes of dwelling in relation to which a billing authority may not make a determination under this section.
(3) A class of dwellings may be prescribed under subsection (2) by reference to such factors as the Secretary of State thinks fit and may, in particular, be prescribed by reference to—
(a) the physical characteristics of, or other matters relating to, dwellings;
(b) the circumstances of, or other matters relating to, any person who is liable to the amount of council tax concerned.
(4) Where a determination under this section has effect in relation to a class of dwellings—
(a) the billing authority may not make a determination under section 11A(3), (4) or (4A) in relation to that class, and
(b) any determination that has been made under section 11A(3), (4) or (4A) ceases to have effect in relation to that class.
(5) A billing authority may make a determination varying or revoking a determination under this section for a financial year, but only before the beginning of the year.
(6) A billing authority which makes a determination under this section must publish a notice of it in at least one newspaper circulating in its area and do so before the end of the period of 21 days beginning with the date of the determination.
(7) Failure to comply with subsection (6) does not affect the validity of a determination.
(8) For the purposes of this section, the Secretary of State may by regulations prescribe the definition of a dwelling to be considered a “second home”.
(3) In section 11(2) (discounts: no chargeable residents) after “sections 11A”, insert “, 11C”.
(4) In section 11A (discounts: special provision for England) after subsection (4B) (inserted by section 9) insert—
“(4D) Subsections (3), (4) and (4A) are subject to section 11C (4).”.
(5) In section 66(2)(b) (matters to be questioned only by judicial review), after “section 8(2), 11A”, insert “, 11C”.
(6) In section 67(2)(a) (functions to be discharged only by authority), after “section 8(2), 11A”, insert “, 11C”.’.
Government amendments 42 to 48.
Amendment 6, in clause 8, page 5, line 28, leave out ‘2013’ and insert ‘2014’.
Amendment 7, page 5, line 29, leave out ‘2013’ and insert ‘2014’.
Amendment 4, in clause 10, page 7, line 41, at end insert—
‘(12A) After sub-paragraph (7) insert—
(7A) In this paragraph, “increase” means an increase under section 11C(1)(b) (higher amount for second homes: England).”.’.
Government amendments 49 and 50.
Amendment 1, in schedule 4, page 48, line 43, at end insert—
‘(8A) Before making regulations under sub-paragraph (8), the Secretary of State must consult with local authorities regarding any proposed requirements for schemes.’.
Government amendment 51.
Amendment 9, page 49, line 15, at end insert—
(d) notify all persons within their area receiving council tax benefit on or immediately following 1 April 2012, of the implications of the draft scheme, including the estimated impact of that scheme on their living standards.’.
Government amendment 52.
Amendment 2, page 49, line 22, leave out sub-paragraphs (4) and (5).
Amendment 10, page 49, line 44, leave out ‘2013’ and insert ‘2014’.
Government amendments 53 and 54.
Amendment 11, page 50, line 2, at end insert—
‘(3A) The default scheme must be designed in such a way as to ensure, insofar as can reasonably be assessed, that no person below pensionable age, in or seeking employment, shall receive a lesser entitlement to a council tax reduction than that to which they would have been entitled under council tax benefit.’.
Amendment 12, page 50, line 2, at end insert—
‘(3B) If the default scheme has the effect of reducing or removing a reduction to which any class of persons was entitled under council tax benefit, it must include such transitional provision relating to that reduction or removal as the Secretary of State, after consultation with representatives of local government, thinks fit.’.
Amendment 13, page 50, line 5, leave out ‘2013’ and insert ‘2014’.
Amendment 3, page 50, line 14, leave out sub-paragraphs (2) and (3).
Government amendments 55 to 61.
Andrew Stunell
I am delighted to be taking part in the resumption of the debate from the previous Session, as it is good to be resuming our consideration of this important Bill and these important provisions. The Bill is a major step forward in localising fundraising and decision making to local councils and restoring to them local control. Discussing local government finance is very much an acquired taste, albeit one that I can see has not been acquired by too many hon. Members today.
May I draw the House’s attention to the publication of the statements of intent, which the Department has tabled for the benefit of hon. Members over the past few days? The statements bring to the House’s attention a great deal of the technical work behind the Bill and of how the Government intend that the scheme should be implemented over the coming months.
John Healey (Wentworth and Dearne) (Lab)
The Minister mentions the seven technical notes. Dozens and dozens of pages about how the Government are going to approach this were released on the working day before Report and Third Reading in this House, and three and a half months after this House finished its Committee stage. Does the Minister accept that to anyone outside this House it looks as though, at every stage, this Government are going out of their way to avoid people being able to take a proper look at this and to avoid this House being able to do its job of scrutinising this Bill properly? We will be leaving too much to the other House to do.
Andrew Stunell
I am extremely disappointed by the right hon. Gentleman’s intervention. May I just remind him that when I assured the House that these papers would be published, there was universal astonishment that we proposed to do that before the Bill left this House? There was a universal assumption that I had somehow misspoken and that we actually meant to do this at a later stage. It is very much for the convenience of this House today that it should have these very important documents available for consideration, but the right hon. Gentleman is right to say that Members of the other place will have every opportunity to give further consideration to the information. Of course, the reason for publishing these papers in advance of the Bill completing its passages through the two Houses is to give local authorities and those who have to work on these schemes the maximum length of time to implement the necessary provisions, so that an appropriate and speedy commencement can be made next year.
Helen Jones (Warrington North) (Lab)
In fact, the Minister promised us not statements of intent, but draft regulations. He said:
“we intend to publish draft regulations while the Bill is still before the House.”—[Official Report, 31 January 2012; Vol. 539, c. 777.]
Where are they?
Andrew Stunell
When the hon. Lady has taken the opportunity to look at the statements of intent, she will see that they are in effect—indeed, my note refers to it—draft statutory instruments. I remind her that we cannot publish draft statutory instruments until we have a Bill to publish them against. We have brought the statements of intent before both Houses so that matters for consideration are fully in view.
New clause 9 allows the Secretary of State to make regulations to introduce the necessary powers for local authorities to tackle fraud in claims for a reduction in liability to pay council tax, which will be effective from next April. Powers to investigate potential fraudulent claims for reductions in liability to pay council tax and to issue the appropriate penalties are a vital weapon for local authorities if they are properly to administer schemes and protect the public purse. The change from the existing scheme to the new scheme means that the new clause is needed to provide the necessary safeguards. Rather than simply reintroducing all the powers that local authorities have to tackle council tax benefit fraud, the clause allows us to work with local authorities to identify those powers and offences that will be needed to make local schemes work. The overall aim is that the regulations will reinstate only the necessary powers, offences, penalties and safeguards that are appropriate for the new scheme.
Mr John Redwood (Wokingham) (Con)
It would be very helpful if the Minister explained to my constituents what extra power is being granted to the council and how it will prevent fraud.
Andrew Stunell
The provision allows us to enter into discussions with local authorities about the point my right hon. Friend raises. It is our intention not to increase the powers of local authorities but simply to transpose them from the existing scheme to the new scheme while recognising that a range of provisions in the current scheme needs to be considered rather than simply transposed without any further thought. New section 14A, which the Bill inserts into the Local Government Finance Act 1992, will allow the Secretary of State to make regulations giving local authorities the power to authorise officers to carry out investigations. Regulations may provide that officers so authorised may require relevant information from specified bodies to check whether a claim that they believe to be fraudulent is in fact so. The regulations may also provide authorities with powers to require that certain bodies must enter into arrangements allowing access to a person’s electronic records.
Mr Redwood
That is the point I am trying to get at. It is already an offence to make a fraudulent declaration and to try to get out of paying this tax, and we all want to stop the fraud, but we also want to keep some civil liberties in this country. I must press the Minister again. What extra powers to investigate people and get access to their data are being taken?
Andrew Stunell
I am sorry if I did not make myself clear. The powers that local authorities rely on to guard against fraud in the current council tax benefit scheme will, in effect, lapse with the introduction of the new scheme. They are not competent to be used under the new scheme, so we need a new scheme. The purpose of the new clause is to ensure that the scheme takes account not just of concerns such as those held by my right hon. Friend but of the need to protect the public purse and that they are kept in proper and proportionate balance. We will not be giving local authorities powers to enter premises or to conduct inquiries and remove and copy documents from such premises. I hope my right hon. Friend finds that assurance helpful. The powers we are giving will require people to enter into arrangements under which access is permitted to relevant records and will, in our view, be sufficient for council tax purposes.
New section 14C will enable the Secretary of State to make regulations providing that authorities may issue penalties as an alternative to prosecution or where a person has not been charged with an offence. That will ensure that local authorities are able to take proportionate action, rather than being faced with the choice of pursuing prosecution or doing nothing. Before the debate on the amendments in the other place, we intend to publish a detailed statement of intent that will spell out clearly our proposals for regulations in accordance with the new clause. We have also made it clear in the new clause that any regulations will be subject to the affirmative procedure and will therefore be debated by both Houses. I hope my right hon. Friend will be somewhat reassured by what I have said.
Helen Jones
Will the Minister explain to the House, for my benefit and, presumably, for the benefit of others, how regulations in this section can
“create an offence that may be committed by a person acting otherwise than dishonestly”?
Presumably, if a person is not acting dishonestly, they are acting honestly. How can that create an offence?
Andrew Stunell
The hon. Lady is well aware that there are such things as negligence and avoidance of reality. We are all aware of such cases. I see quite a few examples in the House from time to time.
New clause 10 inserts into the Bill powers allowing Her Majesty’s Revenue and Customs to supply information for prescribed purposes relating to council tax to billing authorities in England and Wales and to local authorities in Scotland, and provides for offences relating to the misuse of that information. It is the matching part of the preceding clause, the one that gives local authorities the power to ask bodies for information. This clause allows HMRC to supply that information.
Data sharing will be an important way of maximising convenience and reducing complexity for claimants, while also helping to reduce administrative costs. It will reduce the need for individuals to have to provide the same information repeatedly to different public bodies and produce evidence about their situation to those bodies. Section 131 of the Welfare Reform Act 2012 provides for the sharing of information relating to social security benefits and welfare services with a qualifying person for prescribed purposes relating to welfare services or council tax. The two new clauses, together with that provision, will enable data held by the Department for Work and Pensions in relation to current benefits and, in future, to universal credit, to be provided to English and Welsh billing authorities and Scottish local authorities for the administration of local council tax reduction schemes.
Hilary Benn (Leeds Central) (Lab)
I understand the point that the Minister is making about requiring organisations such as DWP to offer information relating to individuals, but section 14A(1)(b) refers to
“powers to require a person to enter into arrangements under which access is permitted to the person’s electronic records.”
I find it hard to see that that is to do with the Department for Work and Pensions. Can the hon. Gentleman assure the House that this does not relate to individual council tax payers and any electronic records that they have—for example, held on personal computers?
Andrew Stunell
I may wish to return to the right hon. Gentleman’s point later in the debate, if the opportunity arises. My understanding is that there is nothing in the provision that in any way takes the powers of public bodies beyond what they are currently able to do in pursuit of council tax benefit and alleged fraud and misuse of council tax benefit. As I understand it, these powers are absolutely parallel to the existing provisions. I am sure that I will have an opportunity to return to that point later in the debate if I have in any way misguided the House.
New clause 10 inserts paragraphs 15A and 15B into schedule 2 to the Local Government Finance Act 1992. Paragraph 15A(1) and (2) will allow Her Majesty’s Revenue and Customs to supply information held for the purposes of its functions to billing authorities in England, as well as to a person authorised to exercise any of an authority’s functions on its behalf.
Mr Redwood
On new clause 10, when the Revenue has shared information with a local authority, what right will the individual concerned have to make sure that the Treasury has shared the correct information and has not made a mistake?
Andrew Stunell
HMRC is obviously under the same obligations when transferring data in such a case as it is in every other case; it must ensure that the data are relevant to the question being asked, accurate and appropriate, and there are of course safeguards via the Information Commissioner should that be broken. HMRC takes data protection extremely seriously, and the provisions in the Bill, which lie on top of the provisions in the Welfare Reform Act, are needed precisely because it is necessary to ensure that we have safeguarded HMRC and given it specific, explicit and closely confined powers on the transfer of data.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
I must say that that is not an adequate response to the question asked by the right hon. Member for Wokingham (Mr Redwood). We have seen a lot of evidence on data sharing recently. The Electoral Commission has been undertaking data-matching exercises that have revealed huge problems of inaccuracy in data shared between Government Departments. This is a serious matter and the Minister is not justified in brushing it aside like that. There needs to be more certainty and more checks and safeguards need to be in place.
Andrew Stunell
I remind the right hon. Gentleman that at the moment HMRC shares these data with DWP, which then takes a view on an individual’s income and shares it with the local authority that administers the benefit. Under the provision, that information will go directly from HMRC to the billing authority. We absolutely share the view, expressed by both the right hon. Member for Greenwich and Woolwich (Mr Raynsford) and my right hon. Friend the Member for Wokingham (Mr Redwood), that it is extremely important that that creates neither opportunities for error nor opportunities for the misuse of data in any other way.
David Wright (Telford) (Lab)
The real danger, as the right hon. Member for Wokingham (Mr Redwood) said, is that there will be mission creep. Experience under previous Governments, including the Labour Government, shows that there is mission creep on data exchange. Discs are produced and information is passed around. What we really need from the Government is a definitive statement on what data can be passed between Departments, because there is a danger that people’s information will be passed around and that the parameters and scope of the data that ought to be shared will be extended.
Andrew Stunell
I am certainly keen to offer, on behalf of the Department and the Government, a clear undertaking that it is not the intention that that should happen, and that the provisions before the House do not create the opportunity for that to happen.
To return to the question asked by the right hon. Member for Leeds Central (Hilary Benn), proposed new section 14A, which relates to the investigation of fraud, will enable local authorities to investigate the eligibility of a person for a council tax reduction, which might require access to the individual’s records, in the same way as can currently be done for council tax benefit. That is separate from the provisions elsewhere relating to HMRC’s sharing of data with local authorities.
Proposed newparagraph 15B(7), of schedule 2 to the 1992 Act, sets out the procedure that Welsh Ministers must follow when making these regulations, which will be through a statutory instrument, subject to annulment procedures. Proposed new paragraph 15C(7) sets out the procedure that Scottish Ministers must follow when making regulations in respect of the data-sharing provisions, which will be through a Scottish statutory instrument, subject to the negative procedure. Without that legal gateway, HMRC would not be able to provide the information that billing authorities need for council tax purposes, such as calculating an entitlement to a reduction under a council tax reduction scheme, and if that were the case it would clearly increase the complexity for claimants and the administrative costs for billing authorities.
Helen Jones
Why does the default scheme replicate the existing scheme on a 10% cut? Is the intention to penalise financially those councils that do not come up with their own scheme in time?
Andrew Stunell
There is certainly an incentive for local authorities to introduce a scheme of their own choosing. The whole point of this is that local authorities should have the capacity to have their own scheme, designed as they see fit. If they have not formed such a scheme by the relevant date in January, the default scheme comes into play, and that scheme will, in essence, continue with the existing council tax benefit scheme in its entirety. Taken together, the amendments to schedule 4 ensure that regulations prescribing requirements for schemes and prescribing the default scheme allow local authorities to take this approach and, if they so wish, to adopt the existing scheme lock, stock and barrel.
The Government have already confirmed their commitment to protecting pensioners on low incomes and have said that there should be no change in support to them as a result of the introduction of this reform. Support will continue to be rules-based, with provisions about the calculations to be made set out in regulations under paragraphs 2(8) and 2(9) of new schedule 1A to the Local Government Finance Act 1992, which is inserted by schedule 4 to the Bill. As the House is aware, it is intended that the support scheme for pensioners will be protected so that their support is as close as possible to what they receive at present. Paragraph 4 of new schedule 1A provides powers for the Secretary of State to prescribe a default scheme in regulations to take effect in any authority that has not made its own scheme by 31 January. The default scheme will cover those who have attained the qualifying age for state pension credit and those who have not yet attained it. The Government have been clear that they intend the default scheme to be as similar as possible to the existing scheme.
These technical amendments will enable regulations prescribing the requirements for pensioner protection and the default scheme to make use of the same powers, definitions and treatments as set out in the detail of the existing council tax benefit legislation. The Government believe that that will help to facilitate their provision of protection for those of pension credit age and provide the legal backstop of a default scheme that can take effect should a local authority not complete its own scheme. In particular, amendment 51, new schedule 1A, paragraph 2 and sub-paragraph (10) will allow the Government, when they set up the scheme, to make equivalent provision to that contained in the one of the enactments listed in sub-paragraph (12). New paragraph (3A) in amendment 54 allows the default scheme to make equivalent provision to that capable of being made under the same enactment.
There is a great deal of detail that I am happy to bring to the House should Members wish to have it, and more in the statements of intent. If the House is content at this point, I will move on to Government amendment 52. As set out in the statements of intent that we have published on our plans for localising support, the Government do not propose to make regulations as to how a billing authority will prepare a scheme because that would not enhance the existing requirements and duties of authorities in consulting and involving local people. It therefore does not make sense to prevent billing authorities, after consulting their major precepting authorities, from proceeding to publish their scheme and to consult others if they are in a position to do so prior to the Bill’s receiving Royal Assent. Amendment 52 allows councils to proceed in that direction if they wish. In other words, if, after consulting its major precepting authorities, a billing authority wants to publish its local scheme and to consult any other person with an interest in the scheme, it can do so straight away without running any additional risks arising from carrying out those steps in advance of Royal Assent.
Helen Jones
Are not the Government too often taking steps to implement legislation before it has been passed? We saw that with the Health and Social Care Bill and we are seeing it again now. The essence of a democratic Parliament is that legislation has to go through two Houses and get Royal Assent before it becomes law. Are not the Government trying to compensate for the fact that they are rushing this change in far too quickly, instead of giving local authorities time to prepare properly?
Andrew Stunell
In the last Session, the hon. Lady spent a lot of time telling us that we had not produced enough detail, nor given local authorities enough warning or flexibility. It seems a little perverse for her to say now that she does not want local authorities to have the flexibility to get a scheme under way pronto, if they are in a position to do so. I do not understand her confused logic.
Government amendment 53 is a minor technical amendment, which will ensure that the first financial year to which the default scheme relates is the same as that specified for the implementation of council tax reduction schemes in clause 8(4). Amendment 55 relates to claims that are in progress when the schemes come into force: in essence, any claims in the pipeline will be rolled over, rather than applicants being required to start again with a new scheme.
That completes my remarks about the Government proposals, but it is right and proper that I comment on the proposals from other parts of the House. New clause 2, tabled by the right hon. Member for Wentworth and Dearne (John Healey), would do away with the automatic entitlement to the single person discount, which has been a feature of council tax since its introduction. I remind the House that households with just one adult are eligible to claim the single person discount on their council tax bill, and that is not a benefit but a tax discount that has been a fundamental feature of council tax since its creation in 1993. Eight million households in England receive the single person discount, of which 90% are in bands A to D; it is therefore not a subsidy for the wealthy. Indeed, 29% of households in Great Britain are single-person households and another 7% are single-parent households, which are also eligible for the tax discount.
New clause 2 would pass to local authorities discretion on whether to grant a discount to such people and the size of the discount as part of setting their council tax reduction scheme. Clause 8(2) provides that
“Each billing authority in England must make a scheme specifying the reductions which are to apply to amounts of council tax”.
Mr Kevan Jones (North Durham) (Lab)
Is this not another example of not giving local councils freedom, but trying to push the blame on to local authorities? Would it not cause chaos in places such as London, where the 32 boroughs could have 32 different schemes? How does the Minister think that could be run efficiently?
Andrew Stunell
That is a severe criticism of new clause 2, which would pass down to councils the capacity to change single person discounts. As the hon. Gentleman rightly points out, that would create difficulties in implementation. I am sure that the right hon. Member for Wentworth and Dearne, when he speaks in favour of the new clause, will explain to the hon. Gentleman exactly how it would work.
New clause 2 would not only interfere with the single person discount, but give billing authorities discretion on whether a 50% discount should be granted in other circumstances. Currently, that applies when a dwelling is not unoccupied but is no one’s sole or main residence. At one time, that would have meant second homes, but the provision on those was amended in the Local Government Act 2003. The 50% discount still applies in some cases, when the second home is job-related. That is a matter of particular importance to the clergy and to service personnel. I suspect that the new clause would have an effect that the right hon. Gentleman does not intend.
Helen Jones
Is the Minister therefore committing to produce a report, as requested in new clause 5?
Andrew Stunell
If the hon. Lady looks at the impact assessment submitted alongside the Bill, she will see that the specific question of whether the policy will be reviewed is addressed. The answer to her question is yes, and, if I remember correctly, the time interval before the publication will be three years.
Taken together, amendments 10, 13, 6 and 7 would delay by a year the localisation of the council tax reduction scheme, pushing it back from 2013 to 2014. The Government are very clear that the reform needs to be implemented in 2013 to secure the agreed savings set out in the 2010 comprehensive spending review. I think the Labour party is still struggling to come to terms with the fact that in 2010, £1 was being borrowed for every £4 spent and we were adding £400 million to the national debt every day. Tackling the deficit and establishing fiscal responsibility is a central part of the coalition Government’s strategy, and the changes to the scheme are fundamental to achieving the savings set out in the CSR.
There are things that councils should already be doing to prepare for the change, and we are supporting them in doing so, not least through the provision that the hon. Lady queried a few minutes ago. They should understand the circumstances of those in their area who currently claim support, ensure that elected members are aware of the decisions that they will need to take and engage with precepting authorities, such as police and fire authorities. They have the opportunity to prepare for and carry out consultation as soon as they are ready to do so—Government amendment 52 supports local authorities in their preparations by making that clear. The Government therefore believe that the amendments to delay the scheme are inappropriate and would create an unnecessary burden for local authorities, which will continue to be subject to their existing equalities duty and so will have to take that fully into account in their decisions.
The public sector equality duty includes a requirement for local authorities to have regard to advancing equality of opportunity between people who share a protected characteristic and those who do not, and to the need to eliminate unlawful discrimination. That continuous process requires relevant decision makers in local authorities to consider equality issues. That has a bearing not only on the question of delaying the scheme, which would incur costs and difficulties, but on amendment 9, which would require local authorities to notify current claimants of the potential impact of the draft scheme. Local authorities are already required, by paragraph 3(1) or proposed new schedule 1A to the 1992 Act, to consult on the draft scheme with such persons as they consider
“are likely to have an interest in the operation of the scheme”.
Furthermore, public sector bodies, including local authorities, are obliged to comply fully with the public sector equality duty.
Helen Jones
On a point of clarification, the Minister appears to be saying that local authorities have a duty to consider those with protected characteristics. The problem he is not grappling with is that if local authorities seek to do that in their council tax schemes—in respect of disabled people, for example—the cut imposed on the working poor will be even greater. Which mode of operation is he arguing they should undertake? Is he arguing that there should be equal cuts for everyone except pensioners, or that cuts should fall more on people who are in work?
Andrew Stunell
The Government have made it absolutely clear that that is a matter on which local authorities should take a decision. I remind the hon. Lady—she made this point—that it is open to councils to continue with the default scheme if they wish to do so; to look at other provisions in the Bill relating to discounts for empty and second homes; to take resources from other parts of their budget, which they could choose to do; and to scale back the benefits they provide in a scheme on which they have consulted.
Mr Kevan Jones
My hon. Friend the Member for Warrington North (Helen Jones) raises an interesting point. Clearly, many northern councils whose grants have been slashed have very little room for manoeuvre compared with Wokingham, whose grant has been increased. Does the Minister agree with the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), who said that those in greatest need will ultimately bear the cost of the cuts? How can that be equal and fair?
Andrew Stunell
The hon. Gentleman has made his point. I should make it absolutely clear that, from the Government’s point of view, it is right for local councils to take account of the local circumstances in their communities and to draw up a scheme that they believe is appropriate for them. I again make the point that other measures in the Bill give greater discretion to local authorities on raising council tax on second and empty homes. The vast majority of local authorities potentially have a substantial stream of additional income, if they believe they will face difficulties because of the reductions in income resulting from this part of the Bill. The Bill has to be taken as a whole.
John Healey
The Minister has just said that the Government want councils to be able to draw up schemes to take account of local circumstances. Why then is he putting this funding noose around their necks by cutting the available money by 10% from the start?
Andrew Stunell
I dealt with that point a minute or two ago, when I pointed out that the UK-wide reduction announced in the 2010 comprehensive spending review of some £500 million—with an impact of approximately £440 million in England—was part of the Government’s deficit reduction programme. Of course that has implications, as Opposition Members have pointed out. We think that pensioners are the important group to safeguard, which is why we are putting the statutory safeguard in the scheme and saying that local authorities should have regard to the most vulnerable in their area when drawing up their schemes.
Nic Dakin (Scunthorpe) (Lab)
Will the Minister acknowledge that yet more demand and stimulus will be taken out of local economies as a result of the measure? Will not the Government then have to revise their borrowing figure yet again, and borrow even more than £150 billion?
Andrew Stunell
I think the hon. Gentleman has got that slightly topsy-turvy. We are ensuring that it will always be better to work and that it will always pay to work. One of the statements of intent sets out the Government’s view on how that can sensibly be integrated with universal credit, which will start in a year or two.
John Healey
How can the Minister say that? He talks about protecting pensioners. In Rotherham, there are 2,600 people who are in work but on incomes so low that they need the support of council tax benefit to get by, week to week and month to month. They will lose out as a result of this measure, and they will do so by significantly more than 10% of the overall cut, so how can the Minister piously say that work incentives matter to this Government?
Andrew Stunell
It would be interesting to hear the right hon. Gentleman tell the House how many of those 2,000 people received an income tax rebate as a result of the decisions taken by this Government. Indeed, I suspect that many of them will have been taken out of income tax altogether.
Andrew Stunell
At least the right hon. Gentleman acknowledges that we are giving with one hand. It is right for local authorities and local communities to take account of the circumstances they face, and I hope that the council in Rotherham will do precisely that.
Mr Kevan Jones
Is not the Minister making it quite clear that this is not about the reform of local government finance, but about deficit reduction? The point that my right hon. Friend the Member for Leeds Central (Hilary Benn) has just made is that those people might well have been taken out of tax, but they will now be hit by this measure as well as by housing benefit cuts. Furthermore, the poorest are the hardest hit by the VAT increase—a policy that he once believed in.
Andrew Stunell
The hon. Gentleman needs to take stock of just how much council tax benefit someone in band A in his local authority might be getting and compare it with the discount that they might receive through the raising of tax thresholds. He might then grudgingly have to agree that the situation is not as bad as he maintains.
Amendment 1 would require the Government to consult on regulations prescribing requirements for schemes. Of course external scrutiny of plans for the framework is important, which is why the Government have published the detailed statements of intent for the key regulations that will deliver the policy. We will publish further statements of intent at each stage, as necessary. That will provide an opportunity for us to engage with local government on the detail of our plans before draft regulations are produced, and give local authorities the key information they need to develop their schemes. There is no need for additional requirements to consult with local authorities, such as amendment 1 would impose. In addition, we are working closely with local government representatives to design the framework within which local authorities will be required to operate, including considering what—if any—provision needs to be made for how local authorities should prepare schemes.
Mr Raynsford
As I am responsible for the amendments, may I remind the Minister that the first of the two he described simply requires that there should be no reduction in benefit entitlement for pensioners. As he has already given that commitment to the House, how can he possibly object to that amendment?
Andrew Stunell
It is completely unnecessary. The right hon. Gentleman could have tabled an amendment that said today is Monday, and I would have resisted it on the grounds that we already know that. We do not need it.
New clause 7 was tabled by my hon. Friends on the Liberal Democrat Benches. It would introduce a premium on second homes that is an exact mirror of the Government’s proposal for the council tax premium on empty homes. The empty homes premium came from the Liberal Democrat stable and I am pleased that it is in the Bill. I am sure that my hon. Friends will be eloquent in supporting their proposition, but I have to tell them that the Government believe that it is right to invest heavily in bringing empty homes back into use, and that is why we are using the policy levers available to us. Certainly, there are difficulties in the second home sector; we fully acknowledge that and we fully understand the concerns that my hon. Friends have expressed.
Mr John Leech (Manchester, Withington) (LD)
I thank the Minister for addressing our new clause. Does he accept that there is a real problem with second homes in some parts of the country? If that problem does not decrease as a result of the changes, will the Government look again at measures to ensure that such areas are protected from a massive increase in the number of second homes?
Andrew Stunell
My hon. Friend makes a very good point. For some rural areas, especially tourist-focused ones, a significant fraction of the housing stock may be occupied—or perhaps unoccupied—as second homes, which makes it very difficult for those who live and work there to secure accommodation. I am sure he has taken note of our changes to the second home discount provisions, which give local authorities in those areas the opportunity to bring their council tax bills up to 100%. His new clause proposes a premium on top of that. I am sure that, in the years ahead, he and I will work jointly on proposals for a Liberal Democrat Government beyond 2015, and I look forward to working with him on that proposition.
Helen Jones
The Minister keeps referring to the right the Bill gives councils to increase the charge on second homes, as though all councils could gain a lot of money from that. Will he accept that in the poorest authorities, which will be hit hardest by the Bill—places such as Gateshead, Rotherham and so on—there is not an awful lot of second homes?
Andrew Stunell
I understand the hon. Lady’s point, but in Rotherham the funding gap is £1.8 million and the total value of discounts and exemptions granted by the Bill £1.9 million. To be clear, a 10% reduction for Rotherham is easily covered by the discounts and exemptions in the Bill. That is not true of every local authority, but it perhaps illustrates that there is a good deal of unnecessary trouble stirring by the Opposition. They are paid to do it, I understand that; but sometimes it is important to refer to the facts. In particular, I noticed that one of the leading financial officials on whom the Local Government Association draws for advice is the chief finance officer of Rotherham, so I am sure that those figures, which he submitted to the Department, are correct.
I am extremely sorry to have detained the House for so long, but I hope that I have provided a good foundation for the debate. The Government believe these to be important and significant reforms that will return power and responsibility to local government and take them out of Whitehall. We believe that is the right direction in which to head. I commend the Government’s proposals to the House and urge right hon. and hon. Friends and Members not to support the other amendments and new clauses.
Mr Raynsford
I draw attention to my interests as declared in the register.
This is a shocking example of how not to legislate. It is three months and 21 days since we completed a rushed Committee stage on the Floor of the House, and during that time, the Government have sat on their hands. Why, during that period, did we not have proper time to discuss the Bill’s very serious implications? Why did the Government not use it to publish the draft regulations that the Minister promised in the debate on 31 January? I remind him of what he said:
“I recognise, of course, that local authorities and suppliers need as much information as possible as soon as possible. For that reason, we intend to publish draft regulations while the Bill is still before the House.”
My right hon. Friend the Member for Wentworth and Dearne (John Healey) sharply picked up on that and asked the Minister whether he meant
“this House or the other House”.
The Minister replied:
“I am looking for a nod somewhere”—
he was clearly in need of guidance—
“but let us stick with this House.”—[Official Report, 31 January 2012; Vol. 539, c. 777.]
That was his commitment on 31 January 2012. As I said, three months and 21 days later we still do not have the draft regulations. The Government, belatedly and to cover their embarrassment, pushed out a series of positioning papers on 17 May—four days before this debate—rightly provoking anger and criticism in local government that it had not been given time to consider the detail far enough in advance of today’s Report stage to issue briefings. We had the worst possible example of the Government rushing the Committee stage, preventing proper scrutiny. I remember well the lack of detailed scrutiny, with a number of amendments simply not being called because of the lack of time. The Government then did nothing for three months and 21 days, and now they have come to this House without draft regulations. They should be deeply ashamed of themselves and should apologise to the House for the shambles they have made of introducing this legislation.
John Healey
Does my right hon. Friend agree that one other consequence of taking the Committee stage on the Floor of the House, rather than in a Public Bill Committee, was that those organisations responsible for implementing the system with concerns about its consequences did not have the opportunity formally to give evidence to the House, and thereby inform the debate and scrutiny, and ensure that the legislation was better than it is now?
Mr Raynsford
My right hon. Friend, who is extremely experienced in these matters, makes a telling point. That was just one further way in which the Government could have ensured proper scrutiny, giving a proper opportunity to those most profoundly affected by the changes to give evidence to us and to help shape a better Bill than the one we face today. But no, the Government simply did not want scrutiny because, as we shall see, they are pushing through a crude measure that will have a profound impact—of some £500 million—either on individuals or on local authority budgets, and they are doing so without proper care or consideration of those consequences. As I have said, they should be deeply ashamed of themselves.
This is a complex matter. The introduction of housing benefit in the 1980s, many years ago, was bungled. It was bungled because it was rushed and local authorities did not have enough time to prepare. There were horror stories from all over the country of people not receiving the benefits to which they were entitled, and huge backlogs of cases building up in local authorities. One would think that a Government who had experienced that in their history—or at least the Conservative part, which went through that experience in government—would want to avoid doing the same thing again. But here we are, with a Government once again rushing to introduce complex changes in benefits that will have profound impacts on many individuals’ potential entitlement, and doing so to a ridiculously tight timetable.
Mr Kevan Jones
I think the Minister answered the question earlier: this measure is not about reform of local government finance, but about deficit reduction. However, is it not also about devolving the responsibility—and the blame—for implementing these proposals to local authorities?
Mr Raynsford
My hon. Friend is absolutely right: this measure is not about reforming the benefits system or creating a benefit; it is about imposing crude cuts in expenditure either on individual recipients or on local authorities. It is about the Government passing the buck, putting the responsibility and blame elsewhere.
Let us look at the timetable. We know how many tasks are involved if a local authority is properly to introduce its own local scheme of council tax benefit next April. What will a local authority have to do? It will first have to consider in detail the implications of the regulations—it has to know what law it has to comply with. Over the last year or so we have heard about various aspirations from the Government. We heard the Minister say that no pensioner should lose; we have also heard the aspiration that there should not be any work disincentives. How those two are compatible we have never had explained to us. If we have a benefit that goes to a substantial number of pensioners and a substantial number of people in low-paid work, and if we exempt one of those groups from any losses and then announce a 10% cut overall, the other group has to face that loss by definition. It is, I am afraid, a simple piece of logic. The Government have not come forward with any explanation of how the aspiration that there should be no work disincentives can possibly be achieved. It is the most flabbergasting case of what George Orwell would have described as “doublethink”.
The first task of local authorities, when they have seen the regulations, will therefore be to consider the implications. Then they will have to devise a draft scheme, taking account of the needs of the area and local aspirations. Many people in this House support the concept of localisation, but want it done properly. That would require local authorities to have the opportunity to consider what the best shape of a local council tax benefit scheme would be for it to respond to the needs of the area. Having done that, they should consult, which we all know is part of good administration. Consulting the considerable numbers of people affected is not trivial—we are talking about 6 million households nationally, which means tens of thousands in every local authority area. After a proper consultation, so that individuals will know the likely implications, local authorities should finalise their schemes and then brief their IT suppliers to produce the software necessary to administer them.
Mr Kevan Jones
As my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) pointed out, the Bill has not changed greatly since we last debated it. The underlying theme remains. As the Minister made clear, it has nothing to do with reform or enabling councils to implement a local scheme; it is actually about the Government’s deficit reduction targets. That is why they are so keen to aim for implementation in 2014.
The Minister seems to think—and I recall that the hon. Member for Mid Dorset and North Poole (Annette Brooke) said this during our last debate—that all local authorities are on a level playing field, but they are clearly not. The Minister suggested that, following the 10% cut in council tax benefit, councils could make up the difference if they wished to, which may be all well and good for councils in areas where the benefit is being increased. I hate to return to my favourite example of Wokingham, but a few weeks ago a very good article in the Financial Times stated that its budget was rising by 3%—unlike the budgets of authorities such as Durham, which are declining by as much as 15%.
We are not dealing with level playing fields; we are dealing with a strategy that the Government have worked out quite well. As we can see from the playbook according to which the Conservative part of the coalition is working, it is nothing new. The same strategy was adopted by the Conservatives in Canada in the 1990s. They made savage cuts in public services and devolved decision making to local level: in their case, federal level. What they were saying was “We are giving you freedoms, but we are ensuring that you take all the blame for the cuts.” The flexibility that councils will be given will, in fact, cause them great difficulty, unless they are in Wokingham.
That very good article in the Financial Times, published on 7 May, was headed “The well-to-do towns that austerity forgot”. I think that it is worth looking at, and not just because it makes it plain that the Government are rewarding their own councils while penalising poor areas. Let us look at the calculations for Wokingham. It is among the 8% of local authority areas—out of a total of 152—that are expecting a real increase in local government spending over the period set out by the Government. Meanwhile, 20% of councils, including Durham, are taking cuts in excess of 15%.
We are being told that we are all in this together and that what is being done is fair, but let us look at the difference between Wokingham and Wigan. In the index of multiple-deprivation, Wokingham scores 5.5 whereas Wigan scores 26. On average, there is an additional 1% increase in local government spending cuts between 2009-10 and 2011-12. Not only are local authorities in the north-east and other deprived areas suffering because their grants are being cut, but they are now going to be hit again by the council tax benefit cut. Local authorities will be told they are being given the flexibility to administer the scheme, but the result will be a 10% cut.
John Healey
My hon. Friend mentions Wigan in the north-west and authorities in the north-east, but the case he makes is equally true for many authorities in Yorkshire and the Humber, such as Barnsley and Rotherham. As he has access to the figures, he might care to look at them in this regard. Wokingham may be facing an increase in its grant, which is astonishing given that local government is taking such a hit across the board, but Barnsley and Rotherham are facing double-digit reductions in their grant, despite increasing need and increasing pressure on services in their communities.
Mr Jones
I agree. My right hon. Friend’s authority and mine are among those that are having to take £152 million out of the budget over the next four years. In Wokingham, however, the council is planning to overhaul its town centre at a cost of £30 million, and it is not closing its libraries and its voluntary sector groups have not lost their funding. In communities such as mine and that of my right hon. Friend, councils are having to find savings—and they are having to find them in areas such as libraries and non-statutory services.
In Durham, the bulk of expenditure goes on adult social care. The Labour-run local authority is rightly making sure the most vulnerable are protected, but that restricts where savings in the budget can be made. I send a clear message to the Liberal Democrats sitting on Durham county council that, as a result of their Ministers’ actions and their Members’ votes on this Bill, Durham and other local authorities are having to make savage cuts. The idea that they can be found simply through efficiencies is complete nonsense. No organisation could reduce expenditure so much without affecting front-line services.
John Healey
Does my hon. Friend agree that not only is the current settlement unfair, but it is the baseline for the future system, and the Bill will lock in that unfairness for at least a decade?
Mr Jones
That is a very important point. That will limit the ability of my council in County Durham and my right hon. Friend’s authority to effect any change. That will lock in the unfair and disproportionate effects, which have been caused by no account having been taken of deprivation. We have just heard a Minister saying this Bill takes account of equality, but it must be the first Bill in history that supports a system by which the poorest in our society and those councils with the largest need—growing aged populations and increasing numbers of looked-after children, for example—will suffer the most.
Mr Jones
Huge regional inequalities are involved. In addition, the pressures on councils in South Yorkshire, and in Middlesbrough and South Tyneside, which I cited in a previous debate, compared with leafy Wokingham, mean that if services such as providing for looked-after children and a growing elderly population are to be protected, the scope for cuts is very limited. The Minister laid it bare in his response: this is not about reforming or giving local councils the ability to be flexible; it is about implementing the deficit reduction strategy of this coalition Government. As my hon. Friend said, that will take demand out of areas such as mine. It is impossible to implement this system without further cutting the support for some of the most vulnerable in our society.
Mr Raynsford
My hon. Friend is making a powerful case, and I wholly agree with him about the adverse impact on some of the most deprived areas. Does he also recognise that one of the bizarre features of the Government’s proposals is that they will inflict losses on people throughout the country? There are 6 million recipients of council tax benefit, many of whom are in low-paid work in parts of the country that are relatively more affluent than the area he represents, and those people will suffer, too. Although he is absolutely right in what he is saying, the impact of the Government’s proposal will be even more savage and unfair.
Mr Jones
Well it will be. The mistake that the Government are making in the spin they are clearly putting out is in saying that this will affect only the “undeserving poor”—the workshy and feckless. As my right hon. Friend rightly points out, many people in receipt of council tax benefit are in low-paid work. In sectors where jobs are growing, the increases are mainly in part-time, low-paid and low-skilled jobs, so more people might come into this bracket.
This measure will affect people, and not only in terms of their council tax benefit; we need to add on the ludicrous nonsense in the housing benefit changes, which will result in individuals in my constituency who have an extra bedroom suddenly finding themselves up to £10 to £15 a week worse off. The Government’s measures will have a cumulative effect on the poorest communities and, I have to say, some of the hardest-working individuals in this country. We might add to that this Government’s VAT increases, which the Liberal Democrats and the Deputy Prime Minister were clear in opposing before the election only then to implement and turn a blind eye to, saying, “It does not really matter because we have a commitment to reducing income tax.” The cumulative effect of these measures will be to take a vast amount of money out of the poorest communities in the country. The opportunity to gain full-time employment is very limited in some areas, because of short-time working, which means lower wages, and the growth in the number of part-time workers.
The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill) has at least admitted that this is exactly what the Government are doing. I have a cutting here from the Daily Mail of 11 June 2010 headlined, “Tory minister under fire for gaffe as he tells MPs: ‘Those in most need will bear the burden of cuts’”. The article states:
“Unveiling a 1.2 billion package of cuts to councils, Local Government minister Bob Neill suggested the poorest areas would suffer the most.
Asked why northern cities were losing…more than southern areas, Mr Neill said: ‘Those in greatest need ultimately bear the burden of paying off the debt.’”
That comes from exactly the same Government who were happy to slash the income tax rate from 50p to 45p, giving huge tax breaks to some of the wealthiest in the country. The Minister should come to North Durham to speak to some of my constituents in low-paid work who are earning less than what some of these individuals are going to get in tax breaks in a year. That clearly shows that the Government do not have a clue about the effect on the poorest in our society. The idea that we are all in this together is complete nonsense.
Mr Graham Stuart (Beverley and Holderness) (Con)
The hon. Gentleman will be aware that for nearly the entirety of the period for which his party was in office the higher rate of tax was lower than it is today. As for the hypocrisy we are hearing from the hon. Gentleman and his colleagues who put this country in a position where public expenditure must necessarily be brought under control, his party always leaves office with unemployment higher that when it entered it and it is under his party that the money has all gone. This Government are having to deal with that, and he should show some shame for his part in the situation.
Mr Jones
I do not know whether the hon. Gentleman is old enough to remember records—I think he is—but if he does he will remember that trying to play a broken record is very difficult. The rhetoric from the election, when the Government blamed everything, including the world recession, on the Labour party, has now become a broken record. We are now into another recession in this country that was of this Government’s making. It is interesting that the Chancellor of the Exchequer now argues that the British economy is not doing well because of the eurozone. In 2008, 2009 and 2010, when the banking crisis hit, it was all Labour’s fault; now it is all Europe’s fault. The only people who are not accepting any responsibility are this coalition Government.
Was our borrowing in 2008 and 2009 the right thing to do? Yes, it was. It was the right thing to do to ensure a growing and stable economy. We do not have that now; we have a recession that has been made in Downing street by this coalition Government. The idea that the fair way of dealing with that is to reduce the top rate of income tax so that it will, through Reaganomics, trickle down to boost the economy is complete nonsense. We have also heard complete nonsense this afternoon that the way to get growth is to slash employment rights. The Government are living in cloud cuckoo land if they think that that will not have an effect on local people.
I was in local government for about 11 years, and I know that if a Government tinker with the system only to get it wrong they pay for it dearly. I remember the Conservative Government getting the poll tax wrong. Even when it was quite evident that it was going to be complete chaos, they would not change their mind. We are trying to rush through a system that will affect some of the poorest people and the poorest councils, adding to the injustice of the skewed way in which the Government have rewarded their friends on councils in the south. We are setting local government an absolutely horrendous task. The idea that the system can somehow be changed tomorrow at the flick of a switch is complete nonsense and I hate to think of the sleepless nights these provisions will give local treasurers. The practicalities will have an effect on councils’ individual income while they try to work out the system.
Mr Raynsford
One of the nightmares that local authority treasurers might well be thinking about is the downside risk in future years. Up to now, we have been talking only about the 10% cut, which totals £500 million, but under the scheme local authorities will be liable if there is an increase in demand for council tax benefit, possibly because of the closure of a local business or because the double-dip recession, which the Government have created, has caused further hardship and unemployment, meaning that more people are claiming council tax benefit. That risk is clearly now with the local authority and many treasurers will be nervous about the implications for them.
Mr Jones
My right hon. Friend makes a good point. Let me take my constituency as an example. Compared with April last year, 384 more people are unemployed. The figure represents nearly 7.2% of the population and shows no sign of decreasing. The demand will not be on the central pot but on the councils. If councils have the large pressures that we see in Durham and elsewhere, because of the number of children in care and adults with social needs, where will that money come from? We can add the 10% cut to those pressures, too.
As for the chaos that the process will lead to, although some councils—certainly Wokingham—will be able to afford to absorb such a reduction to their budget, not many will be. The mechanics of putting the system in place will be very difficult. What will happen if, with the best of intentions and advice, the computer systems cannot be put in place? Where will a local council find its money? What will happen if a scheme is put in place that has teething problems that lead to mistakes? What will happen with appeals and with the process of dealing with the situation? There is no remedy at all.
Chaos and uncertainty will be faced by many low-paid families in this country and they will not know how the change will affect them. That is why amendment 9, tabled by my right hon. Friend the Member for Greenwich and Woolwich, is right. It must be made crystal clear what the effect will be on individuals. I support my right hon. Friend’s amendment, but I think that it might be playing into the Government’s hands, as they will want to blame the local council—in my case, Durham—for what is happening. Councils need to make it very clear that responsibility for the cuts lies with this Conservative and Liberal Democrat coalition Government. If they do not do that, the tactics that the Conservatives are using and that the Liberal Democrats have sleepwalked into mean that local people will blame local councils.
Local Liberal Democrat councillors in Durham, for example, are arguing against changes to library hours and to local leisure centres. They will sign petitions to their hearts’ content. Small equatorial rainforests are decimated for local Liberal Democrat copies of “Focus” that state that they are supporting decisions against such moves by Labour Durham county council. They are not explaining to the people, however, that their coalition with the Conservatives in government nationally is cutting the county council’s budget savagely while helping the leafy Wokinghams of this world. That is the message we must get across to people: these cuts and their effect on local services and on people’s income are down to the coalition Government.
I reiterate what I have said before: not one single piece of the legislation that has such an effect could go through without the complicity and support of the Liberal Democrats. They must take as much of the blame for the pain and heartache coming the way of many people in County Durham over the next 12 months as the Conservatives and it is no good hiding behind the idea that County Durham has somehow been given the freedom to come up with this scheme.
John Healey
It is a pleasure to follow my hon. Friend the Member for North Durham (Mr Jones), who has more than a decade’s experience in local government and knows what it is like for local authorities trying to deal with central Government cuts and central Government diktats. He knows that local government across the board, irrespective of party, is willing to change but wants that change to be implemented properly and fairly. Much in the Bill will make that more difficult for local government in the months ahead.
The Bill signals that council tax benefit is no longer a benefit or an entitlement for those whose incomes are such that they need help with council tax costs. In future, there will be a means-tested, cash-limited discount on council tax bills. That limit next year will be 10% less than the spend on and cost of council tax benefit this year. I have the figures released recently by the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), showing the total subsidy properly paid by councils to those entitled and then properly reclaimed from Government in 2010-11. In Rotherham, the figure was £22.5 million; in the other local authority that my constituency partly covers, Barnsley, it was nearly £20 million; and the total for South Yorkshire was £112 million. That money went to many of the poorest, who need help with their council tax costs and who currently have an entitlement to that help. In future there will be a smaller cash-limited pot and a severe means test, with that £112 million cut from the outset by 10%.
Earlier, from the Dispatch Box, the Minister gave some figures—£1.8 million and £1.9 million—which he said were the figures for the value of the reliefs and discounts compared with what he argues is the shortfall in Rotherham. Of course, reliefs and discounts are part of the council tax scheme. They bear no relation to the level of council tax subsidy, which under the current system is paid by councils and reclaimed from central Government. If the Minister was telling the House and telling me, as one of the MPs representing Rotherham, that there will be no cut in the pot available for council tax benefit payments next year compared with this year, I will willingly give way to him, but I think he was using those figures to make a completely different case, entirely separate from the challenge that Rotherham and every other council will face next year because of the decision taken, as he admitted tonight, for the purposes of crude deficit reduction, not as a bold local and localising reform. The Minister has not accepted my offer to give way, so I take it that he accepts the case I made and is not able to sustain the impression that he gave the House earlier.
The problem faced by many of the poorest non-pensioners is that they will lose the most, as the Government tell councils to protect pensioners and make everybody else worse off—in other words, penalise everybody else and protect pensioners. That cannot be done without causing significant pain for many non-pensioners because the overall sum available, irrespective of need or entitlement under the current system, will be cut by £500 million next April.
John Healey
The hon. Gentleman must not have been listening carefully, because that is not the case my hon. Friend was making. His point was that providing special protection for pensioners when £500 million is being cut overnight from the available fund means that those people who are not pensioners but who are currently entitled to council tax benefit or council tax support will inevitably be hit harder. Local authorities and charities are making the same case, as did Barnsley Advice Network to me last week when we discussed the potential challenges and problems that people will be forced to face.
Andrew Gwynne (Denton and Reddish) (Lab)
I apologise for coming late to the debate. I had a meeting elsewhere in the Palace.
My right hon. Friend is making a pertinent point. Is he aware of the work done by the House of Commons Scrutiny Unit, which has estimated the impact of a 10% cut to council tax benefit, with protection for the over-65s, using DWP figures? It calculates that non-pensioners will face an average cut of 16% in their council tax support.
John Healey
I am glad to see my hon. Friend in his place. He has been an active participant in all debates on the Bill, including on Second Reading and in Committee. I have seen that work by the House of Commons Scrutiny Unit, which I think is useful and supports the point I am making to the hon. Member for Manchester, Withington (Mr Leech). If anything, the 16% figure is probably on the conservative side. My local authority in Rotherham calculates that non-protected, non-pensioner claimants of council tax benefit are likely to lose, on average, 19% of their support.
Mr Kevan Jones
To clarify my earlier point for the hon. Member for Manchester, Withington, who is obviously having problems with earwax tonight, I was not suggesting that pensioners should be taken out of that protection; I was making exactly the same point as my right hon. Friend is making. The fact of the matter is that the hon. Gentleman will go into the Lobby tonight to vote for some swingeing cuts to the lowest paid, including some of his constituents in Manchester, who no doubt will have their revenge at the next general election.
John Healey
My hon. Friend makes clearly and succinctly the points he made earlier.
I am concerned about the percentages, whether 16% or 19%, and the averages, such as the LGA’s calculation that non-pensioners are likely to lose, on average, £6 a week from the support they currently receive to help pay council tax. Percentages and averages are one thing, but the family, household or individual—the one in eight people currently entitled to council tax benefit who are in work but do not earn enough to cover their council tax bills without help—will face a reduction of perhaps £10, £12 or £15 a week, at a time when other costs are being loaded on them and they are struggling to make ends meet. They will find such a difference really hard to deal with. I hope that we do not lose sight of the sort of pressure that the Bill and the changes the Government are making will put on many households, including many that are working hard and have an entitlement that they simply will not have under the new system.
John Healey
I wonder—are they unintended consequences? If they are, the degree of negligence in the legislation is unforgivable. If they were foreseen and have been calculated as part of the legislation, that speaks volumes about the “doublethink” and “doublespeak” that my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), quoting Orwell, talked about earlier.
The Government are making a pious claim to be on the side of those who are struggling but who are trying to do the right thing by staying in work in order to support themselves and their families, but those people will find it much harder from next year as a result of the changes that are going ahead. In Rotherham, just over 2,600 people are in that position, in Barnsley, just over 2,200, and across South Yorkshire there are more than 13,500 people in work who earn so little that they are entitled to support from us and others to help cover their council tax bills.
Mr Raynsford
I wholly concur with my right hon. Friend’s argument. Does not he, like me, think it extraordinary that the Government, when they first announced the proposals, said specifically that they intended the reduction not to create any work disincentives? That has now disappeared from the rhetoric—they appear to have forgotten that objective entirely. Given their overall approach and the rhetoric they are adopting in relation to other benefit changes, such as saying that they are on the side of people in work, is it not extraordinary that they are now explicitly accepting the fact that this measure will create serious work disincentives?
John Healey
I hesitate to disagree with my right hon. Friend, but I am not sure that they have forgotten it, because earlier the Minister said from the Dispatch Box that the scheme will somehow preserve work incentives. The whole design of the proposal, the framing of the legislation and everything the Government have published do not match the claims he has made from the Dispatch Box. They are hollow words that will hurt many people who are working at the moment and others who are not pensioners but who rely on the council tax benefit to help make ends meet, week to week and month to month.
John Healey
The Minister wants to intervene. Perhaps he will give the House the straight account of the figures for Rotherham, on which I challenged him five minutes ago.
Andrew Stunell
I was going to intervene on the right hon. Gentleman’s last point, but I am happy to respond to the other one as well. On the last point, it is absolutely not the case that the Government have made explicit anything relating to disadvantaging working recipients. On the contrary, the statement of intent—I appreciate that he might not have got to this section—makes it clear that it is important for schemes devised by local authorities to link with universal credit and preserve exactly that protection.
On the other point, Rotherham council, according to the figures it submitted to the Department, will lose approximately £1.8 million of funding, but the discounts and exemptions that it will be able to recover in future will amount to £1.9 million. That is all in the Bill before the House today. Whether the council chooses to join those two things together is a matter for it, but it is absolutely the case that, taking the Bill as a whole, the council will in fact have a greater capacity to meet the needs of the people it serves.
John Healey
The Minister has just told the House and me that, to run the new scheme from April next year, Rotherham will have available no less funding than it has during this financial year. I will look very carefully at the facts, and, if they match the Minister’s words, I will welcome them; if they do not, I shall demand that he puts the House straight and offers an apology.
On work incentives, will not the Secretary of State therefore use his powers under schedule 4 to specify that people in work must, and work incentives will, be protected as he proposes, and has pledged, to use them for pensioners? If that is the case, the Minister’s actions will match his words. If that is not the case, exhortations on the importance of local government schemes reflecting needs and not damaging work incentives will not be worth the paper of the circular on which they are sent out, because there will be no protections guaranteeing the preservation of work incentives until and unless the Secretary of State chooses to use his powers as he has pledged to use them for pensioners.
Until that point, it is reasonable for Opposition Members, who are concerned about the future of this support for council tax payments, to continue to press the Minister and to be concerned that non-pensioners are likely to bear a heavy cut in their current support. Those on low incomes who are not pensioners, but who would get the full council tax benefit under the current system, will, as the Barnsley advice network has told me, have to find 20% of their council tax bill from their basic income, whatever they earn, as councils try to make less go further.
The Minister is old enough, experienced enough and has been involved in local government long enough for this measure to sound a warning to him and his colleagues. This is the return of the poll tax—[Interruption.] There are a few groans from Tory Members, but let us remember that a 20% minimum payment expected of all people, whatever their means, was part of the flaw in, and at the heart of the unfairness of, the community charge a couple of decades ago. In practice, that is what we are building in for non-pensioners: a requirement to cover for themselves, whatever their income, about 20% of the council tax costs in their local area.
Given the way in which the measure will work for many, it is a return of the poll tax: rushed into law and rushed into practice, with a deaf ear to local government, to charities, to experts and to Members, who warn the Government, “You’re pushing too far, too fast with these changes.” I will return in a moment to the amendments on the legislation’s commencement tabled by my right hon. Friend the Member for Greenwich and Woolwich, but first let me do my job and introduce new clause 2 and the amendments that stand in my name.
With new clause 2 and amendment 2, I seek to challenge the Secretary of State’s powers over, and prescription of, the new council tax support schemes. My purpose is this: I believe that the House and local government require a justification for the inclusion in this Bill of such powers of prescription from the centre over the local, otherwise their removal from the Bill is justified. None of the arguments that I have heard from Ministers, on Second Reading, in Committee or today, justifies the extent of the centralised powers vested in the Secretary of State to design and to enforce a particular manner of council tax support scheme.
The Government claim that the reform is a localising one. If it is, they should localise the decisions on the design of, and procedure for preparing, the scheme. They should localise the decisions and let the local authorities that will run the scheme devise them, in the Minister’s words, to suit local circumstances.
Andrew Gwynne
My right hon. Friend is absolutely right that any system has to be flexible enough to ensure that, if there are changes in demand locally, the system can catch up with the increase, but is not the concern that the Government’s proposals are completely inflexible, and that any increase in demand will impact on local services?
John Healey
My hon. Friend is absolutely right. Any increase in need, demand and, as a consequence, cost will all have to be borne by the local authority—borne by switching funding from other budgets that perhaps support important local services, or borne by cutting back within the council tax support scheme the support that is paid to those who remain eligible.
However, I want to exemplify the challenge that the Minister faces to justify the powers that the Secretary of State is taking in the Bill in order to prescribe from the centre. In paragraph 3(4) of schedule 4, the Secretary of State may make regulations on the procedure for preparing the scheme, including in paragraph 3(5) regulations to
“require the authority to produce documents of a particular description”;
regulations to
“include requirements as to the form and content of documents produced in connection with the preparation of the scheme”;
regulations on the
“requirements…about the manner in which such documents must be published”;
regulations to
“require the authority to make copies of such documents available”
in certain ways, and “to supply” copies of such documents to certain people; and even regulations to prescribe the charges that local councils should make for those documents.
In all honesty, that is the sort of prescription we expect to find in a memorandum from a publications manager to a graphic designer and a press officer, not from central Government to elected local government officials throughout England. If the Minister and the Secretary of State are to have any credibility on the claim that this is a localising move and a localising measure, they should back off and guarantee what they say. If the schemes should be under local control, as the Minister and Secretary of State claim, the Government should give local authorities the powers to control them, not take those powers and exercise them from the centre.
Amendment 1, which is also in my name, is in the same vein although more moderate, because it seeks simply to require the Secretary of State to consult before making any changes to the requirements that he chooses to impose nationally on local schemes. As the Bill stands, there is not even any obligation to consult local government on the requirements that central Government impose.
Paragraphs (8) and (9) of schedule 4 make it clear that the Secretary of State may make regulations to require any matter to be included in the design of a local scheme; may prescribe any class of person to be included in the scheme; may prescribe the reductions that cover any class in any area; and, to reinforce my earlier point, may prescribe the way in which the provisions are made. That completely undermines not only the constant mantra of Ministers across the range of their departmental responsibilities but the specific pledge that they made in their response to the consultation, where, on page 2, they said that this is
“a policy of decentralisation that will give local authorities increased financial freedoms”.
Mr Kevan Jones
Is not this yet another example of the Secretary of State’s schizophrenic approach to local authorities? His previous edicts have given advice on everything from pot plants to levels of chief executives’ pay to publications. He wants to give the impression that he is giving up powers, but in fact he is retaining them.
John Healey
To be honest, no Minister of any Government is immune to that temptation. I am sure that it would be possible for the Minister to find one or two examples where I myself might have made such moves as a Local Government Minister. However, we in this House have a right to challenge the Government on what they claim is the underpinning principle of the Bill and to point out how the principles they claim are not matched in their legislation. There is a strong, principled case for the Secretary of State to back off, loosen the reins, and let those in local government devise the schemes that they will be obliged and required to run.
There is a principled case and a practical case for the amendments. If the Government are able to set the key constraints and parameters of any scheme, and to do so at any time, it is entirely possible not only that local flexibility—the ability to tailor to local circumstances—will be undermined, but that local authorities will devise their schemes, set about implementing them, and then find that they have to revise them because the Secretary of State has decided to step in and make regulations under the many regulation-making powers that he has available to him in this primary legislation. If it is pensioners today, could it be carers tomorrow and ex-service personnel the day after?
John Healey
Perhaps that is not as serious a case to put to the Government as ex-service personnel and carers, but my hon. Friend makes the point. If the Secretary of State had a particular concern about cat lovers, he could indeed use these regulations to make special provision for council tax support for them.
John Healey
Perhaps, Mr Deputy Speaker, I had better not pursue that. However, it is certainly true that given their drubbing a couple of weeks ago, the Liberal Democrats will have to chase votes wherever they can find them.
Amendment 1 is designed to challenge the Government to concede, and to give a commitment to this House, that should they use their powers under the Bill and make stipulations about the schemes that local authorities will run, they will at least consult local government before doing so.
Amendment 3, which also stands in my name, exemplifies my belief that, as my right hon. Friend the Member for Greenwich and Woolwich argued, this is a rushed reform that has been introduced without an ear to proper consultation or a thought to the consequences. The amendment attempts to flush out whether the Government have properly considered the impact of the Bill in relation to the provisions of the Localism Act 2011, which allows a local authority, in setting its budget and its council tax, to put to the vote in a referendum a level of council tax that it might want to propose for its area, and allows local residents to veto what they may regard as excessive council tax rises. Under those powers, a local authority must hold a referendum no later than the first Thursday in May of the financial year to which the council tax would relate. In practice, that means that a local authority will have to run contingency spending plans, budgets and council tax levels until the result of the referendum is known, and if it is unsuccessful, those contingency budgets will need to be put in place and new council tax bills issued. That process must take place around the turn of the financial year, and by early May at the latest, yet the Bill requires that the council tax support scheme must be designed and in place by January—before most local authorities finalise and agree their budgets and council tax levels, and certainly before the level in any referendum might be established.
That mismatch indicates that this reform is ill thought out, rushed and likely to be wrong, and it reinforces the arguments that my right hon. Friend made about his amendments 6, 7, 10 and 13, to which my name has been added. There are good reasons for making this part of the benefits system local, but there is no justification for doing it by making harsh cuts to the national and local totals of spend available, by capping the totals against any future rise in needs or costs, by requiring local councils to carry all the risk of any increases in claims, or by forcing very big cuts in council tax support for many of those who need it most.
When we last debated this in Committee in January, my right hon. Friend and I noted that councils were faced with an extraordinarily tight timetable of 12 months until the point at which they would have to have these new schemes in place. That period is now eight months. There is no time to consult local residents, to design the computer software systems necessary to run these schemes or to test them and put them into practice, to work out how the tapers to the new universal credit system will have to work with the council tax support system, or to plan for the new local scheme in the context of next year’s budget planning by local authorities.
This is a disaster waiting to happen. The Government have not done the work needed for local government to do the work that it needs to do. I say this to Ministers: take a leaf out of the Health Secretary’s book, pause, listen, and be prepared to put back the start of this scheme from April next year to April 2014.
Helen Jones
It is a pleasure to follow my right hon. Friend the Member for Wentworth and Dearne (John Healey), whose speech was not only very passionate but extremely well informed.
Nothing could illustrate better what a shambles of a Bill this is than the seriousness of the new clauses and amendments that the Government have tabled at this late stage. It is, frankly, a gross discourtesy to the House to bring these issues before us with little notification and little opportunity to discuss them. Because we have not been allowed to take evidence on the Bill, we have had no evidence on the new clauses. We would have benefited from evidence on them, particularly from legal experts. Although the Minister assures us that the new clauses replicate powers that are already in existence, that is debatable. He could not answer a number of the questions that were put to him about how inaccuracy in data records could be challenged, which electronic records could be accessed under the powers, and how the powers would relate to a person’s personal electronic data that are held on their own PC.
Every council will, of course, need the right system in place to tackle fraud—nobody would argue otherwise. However, it is interesting that we have heard nothing from the Government in this debate about the reductions in council staff, which are making it much more difficult to tackle fraud, or their desire to abolish the Audit Commission, which is the very body that searches out fraud and assists local councils in tackling it.
I am concerned about some of the measures in the new clauses. Some of them do indeed replicate those in the Social Security Administration Act 1992. However, the Minister cannot explain how one can commit an offence other than dishonestly and he cannot explain the offence of
“allowing a person to fail to notify”
something. What on earth does that mean? Does one have to be under duress, or not? What is the definition of the word “allowing”? What kind of proof is required? Above all, what will the defence against those offences be? That is not clear from what is before us. I want to see dishonest people banged up in prison or fined, but I want people who have made an honest mistake to have a proper defence for any charges that are brought against them. It is a great shame that we were not allowed to discuss the new clauses in Committee.
I want to concentrate on new clause 5, which I tabled with my right hon. and hon. Friends. The Government’s plans for council tax and what we have heard from them today clearly demonstrate how remote they are from the realities of life for many people in this country. They propose to take money away from some of the poorest people, including, as my right hon. and hon. Friends have said, people who go to work every day to earn their poverty. People with disabilities and families with children will pay the price for the incompetence of the Government. Many of them will already have lost tax credits or disability living allowance, which is being cut by £2.7 billion. It is estimated that about 400,000 disabled people will lose employment and support allowance when it is time-limited to one year for people who have paid national insurance contributions. Those very people will be hit again by the Government’s plans.
The Government consultation document said that they would
“seek to ensure that the most vulnerable in society, in particular low income pensioners, are protected”.
Pensioners are indeed protected from the cuts, and we do not disagree with that. However, coupled with the 10% cut in the amount that is available, that means that other people, many of whom are equally vulnerable, will face council tax increases. That is something that the Liberal Democrats do not seem to understand, but it is simple mathematics.
The Government’s default scheme in their so-called statement of intent replicates the current scheme and gives protection to many more vulnerable groups. The intent, I suppose, is to penalise councils financially. However, it is difficult to argue that we should protect vulnerable groups in the default scheme, but not legislate for that protection elsewhere.
There is no protection for people with disabilities—not even for those who are placed in the support group for ESA. Those people are, by definition, unable to seek work, even if it was available, which is not likely given the current flatlining economy. There is no protection for people placed in the work-related activity group, who are not expected to
“seek paid employment to increase their income”.
They are asked to take steps to increase their employability, but they are not yet expected to seek work. That shows how spurious is the Government’s claim that they are doing this to spur on local councils to get people into work. That is nonsense.
Mr Raynsford
My hon. Friend is making an extremely important point. The Government are introducing this Bill at the same time as they are making a number of other changes. That will have a large cumulative impact on certain households. What is deeply shocking is that the Government are not aware of what that cumulative impact will be, nor of the extent to which what they propose this evening will aggravate an already disastrous situation for people who are suffering other losses of the sort that she has identified.
Helen Jones
I could not agree with my right hon. Friend more. The Government simply have no idea of the pressures on people on very low incomes.
The Prime Minister said that carers were the
“unsung heroes of our society”.
He went on to say:
“We should all support, recognize and celebrate the incredible work that carers do”.
That was in 2010, and times have changed. Now he wants not to support them, but to increase their council tax—another broken promise.
The Government also do not want us to talk about those who are receiving council tax benefit and are in work. The Minister for Housing and Local Government, who is not here this evening, likes to pretend that those people do not exist. He told the Communities and Local Government Committee that
“if somebody is in work they will not be receiving the benefit because they will not need to.”
That is another example of why he is tipped for promotion: it shows his incisive grasp of complex issues. Only someone as wilfully blind as him could come out with that, and only someone with no experience of what it is like to live on a low wage.
Andrew Gwynne
My hon. Friend is coming to the crunch. A substantial number of people in receipt of council tax benefit are in work. It is an in-work benefit, not just an out-of-work benefit as some Government Members would like to portray it. Given that the Government’s statement of intent states:
“Local schemes should support work incentives, and in particular avoid disincentives to move into work”,
can my hon. Friend fathom the thought processes of those who are bringing in this scheme, which will clobber the working poor?
Helen Jones
My hon. Friend is correct and I will come on to some examples of what he says in a moment.
I received a parliamentary answer from the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), which said that in 2010-11, the last year for which we have the figures, 743,660 non-passported council tax benefit recipients were in work. There were 2,860 such people in Stockport, which is the area that the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell) represents. That is more than 743,000 people who the Minister for Housing and Local Government does not think exist. They do not go to Tory fundraisers, I suppose, or attend the black and white ball. All the time, his implication has been that council tax benefit goes only to those not in work. The further implication, of course, is that they are deliberately not in work, which is what underlies most of what he says. Coming from a Government who preside over unemployment of 2.6 million, that is breathtaking arrogance.
Mr Kevan Jones
Does my hon. Friend agree that the people who will be affected are the same group who will be affected by the crazy bedroom tax? If they have an unoccupied bedroom in their house they will lose housing benefit, which is another in-work benefit.
Helen Jones
My hon. Friend is right. The same group of people is being hit again and again. Whatever the Government tell us, we are not all in it together.
Andrew Gwynne
My hon. Friend mentioned in passing the borough of Stockport. I will leave the Minister to speak for the people of Hazel Grove, but I assure her that I am acutely aware that a substantial number of my constituents in the Reddish part of Stockport are in work and qualify for council tax benefit.
Helen Jones
My hon. Friend is quite right. We can go through every local authority in England and find a number of such people.
It is not just people in work and on low wages who will be affected but disabled people deemed unable to seek work, carers, and part-time workers who do not even show up in the figures. An increasing number of people are being forced to seek part-time employment, and they will pay the price of the Government’s cuts.
As my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) said, there is a form of “doublethink”. The Minister for Housing and Local Government told the Select Committee that people could be protected by
“getting economic activity going so there are jobs.”
The Government are prone to lecturing everybody on getting economic activity going. They lecture councils and the European Union, but the one set of people they do not seem to lecture is themselves. They have no plan for growth at all.
Many people in receipt of council tax benefit are in work or not expected to seek work because of their circumstances. For them, the cut will depend not on their individual circumstances but on where they live and, crucially, how many pensioners there are in their local authority area. That varies hugely from one area to another. Claimants of non-working age make up 34% of the total in East Dorset. In Tower Hamlets, the figure is 68%.
The benefit cut that people receive could vary between 13% and 25%. The worst thing about it is that it is entirely arbitrary, with no pretence of fairness whatever. In fact, in their recently published statements the Government have explicitly rejected the idea of taking into account the number of pensioners in a local authority area when setting the funding level. Many Government Members will have cause to regret that in future years.
As some of the Opposition amendments point out, the new system will hit not only those in work or unable to work but those seeking work. The Government have been in such a rush to bring it in that they have failed to align it with universal credit, to which the Minister referred earlier. If they are so keen to have universal credit, they should have waited to align council tax benefit with it. Their own consultation document acknowledged the problem, stating:
“There is a risk, however, that some of the advantages from the single Universal Credit taper…could be lost if there is a separate and overlapping withdrawal of council tax support through localised schemes. This would produce a marginal deduction rate higher than 76%”.
If millionaires were having to put up with that, the Government would be rushing in to rescue them. What sort of Government include those warnings in the consultation and then ignore them? They are either incompetent or vicious—one or the other. [Interruption.] Both, somebody says, and I am beginning to think so.
As we have seen with business rates, the areas in greatest need will be hit hardest. Let us take the impact on people in work as an example. In Liverpool, there are 6,570 people in work and receiving council tax benefit. In Durham, there are 5,810, in Birmingham a whopping 16,780 and in Hackney 7,910. Just down the road in the City of London, there are precisely 40. In Purbeck there are 580, in Runnymede there are 610 and in Wokingham—I could not pass up another chance to mention Wokingham —there are 780.
This change is a triple whammy for the poorest areas. First, it will mean that local authorities with more people in work and receiving council tax benefit face a much bigger risk of default in their council tax collection. Secondly, it will make it much harder for them to mitigate the effect of the cut on people of working age. Thirdly, there will be a bigger impact on their local economy, because money will be taken from people who would otherwise go out and spend it. It will come as no surprise to my right hon. and hon. Friends to hear that the New Policy Institute estimates that five of the 10 hardest-hit local authorities will be among the top 10 most deprived in the country—Hackney, Newham, Liverpool, Islington and Knowsley.
In the Liverpool city region, it is estimated that the Government’s proposals will result in cuts of 17.23% for those who are not pensioners. In Halton, a single person will have to find at least £179 more each year. In Sefton, which has a higher than average number of pensioners, a couple in a band A property will have to find an extra £226 a year. That is probably small change to Government Members, but to people who struggle to keep their heads above water—those who have to count every penny to get to the end of the week without getting into debt, and without being driven into the arms of the loan sharks who are on many of our estates and ready to batten on vulnerable people—it is the difference between surviving and not surviving.
I sometimes wonder what Ministers know of that world. Have they ever stood in a supermarket watching people put things back because they cannot afford to pay for everything in the basket? Do they understand the struggle that some families have if a child needs a new pair of shoes? They know nothing of it, and they have no wish to understand it.
Mr Raynsford
Is it not telling that not a single Government Back Bencher has contributed to this debate in support of the Government’s measures? Does that not indicate that they know deep down that these measures are deeply flawed, deeply unfair and deeply wrong?
Helen Jones
My right hon. Friend is entirely right. [Interruption.] The Under-Secretary says that it is because they think the measures are right. Well, if I cannot appeal to their moral sense, let me try appealing to their economic sense. The poorest areas will have the biggest hit to their local economies. The 2010-11 figures show that a 10% cut will mean £10 million being taken out of Birmingham, £6.1 million out of Liverpool, £3 million out of Newham, £2.7 million out of Newcastle and £2.9 million out of Gateshead. By contrast, the prosperous local economies lose less. Runnymede will lose £454,000; Wokingham £518,000; Melton more than £246,000; and Hart £293,000; but—as we might expect with this Government, this is a big “but”—that is not the whole story.
Graham Jones (Hyndburn) (Lab)
My hon. Friend makes excellent points, but on the confusion in the appeals process it is not yet clear whether council tax benefit staff will be employed in future by the Department for Work and Pensions under the universal credit or within local authorities. That changeover adds to the complexity and confusion.
Helen Jones
My hon. Friend is entirely right. Even if we supported the Government’s changes in the Bill, their failure to align the changes with universal credit will cause chaos throughout the system, including for staff.
Many Government amendments relate to Wales, which the Government forgot about when they drafted the Bill—to lose a county is unfortunate; to lose a whole country is rather careless—but the Welsh Government have said they are profoundly concerned by the plan. Some 327,000 people in Wales will be affected, whom the Government also seem to have forgotten about—they have developed a habit of absent-mindedly mislaying citizens, such as those in work or those who happen to live in Wales.
The Government have tabled a series of amendments on council tax reduction schemes and default schemes, which could have been discussed properly had draft regulations been brought before the House, as the Minister promised us on 31 January. Instead, we are once again being asked to grant wide powers to the Secretary of State without any idea how they will be exercised, which is extremely worrying and a poor way to make legislation.
My right hon. Friend the Member for Greenwich and Woolwich raised the rushed implementation of the proposals, an important problem we raised in Committee. Last week, we received statements of intent, but not the draft regulations we were promised. I get the feeling the Government are simply not ready to implement the proposals. It is as if someone, somewhere in the Department for Communities and Local Government—I suspect the Minister for Housing and Local Government—had a wizard wheeze and said, “I know. Let’s cut council tax benefit,” but did not work out the details. The Government, following the example set by the Prime Minister, do not seem to do detail. They just wave a languid hand and say, “Detail will follow.” But, in government, details matter. They affect the lives of the people whom we represent. The Bill will result in enormous changes for local authorities, which are being asked to cope with changes to non-domestic rates and with the localisation of council tax benefit, all at the same time.
By next year, local authorities will have to be ready to run their own local schemes, yet the Bill was rushed with indecent haste through the Committee—because the Government did not appear to understand the rules for carrying over a Bill—then kept hanging about like some kind of slow-cooking stew until after the Queen’s Speech. It will not have a Second Reading in the other place until, I believe, 12 June, and its first Committee sitting there is scheduled for 3 July. If, as I am told, the other place will not be sitting in September, who knows when the Bill will complete its passage?
Amendments will have to come back here, and if they are not agreed to—[Interruption.] The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill) talks about the recess, but he has perhaps forgotten that this House is sitting in September, although the other place does not appear to be doing so. That is the kind of detail that matters when we are trying to get legislation through. There could well be ping-pong between the two Houses. Regulations will also have to be set and passed by both Houses. In the meantime, councils are being expected to draw up a scheme without knowing the precise rules that they will need to follow, and with no certainty about their funding. That is not sensible government—it is pass-the-buck government.
We have also heard about the difficulty of producing the software required to implement the changes. Councils will need to be very clear about what they want from the firms that are designing that software, but they do not have the necessary information at the moment. Why are the Government so determined to meet the 2013 date that they will not listen either to local authorities or to the experts who design the system? I would call them pig-headed, but that would probably be unfair to pigs. Why are they so keen to impose cuts on the poorest people and chaos on local authorities? We know the answer: it is simply that they are out of touch.
The people who will suffer are the poorest people. Councils are in a no-win situation. If they protect vulnerable groups other than pensioners, those in work or seeking work will face even larger reductions in their income. This Government believe that the poor must pay for the poor, while tax cuts are given to the rich. They believe that the living standards of those who have very little have to be cut, while bankers in partly state-owned banks swan off for courses on executive nutrition at a spa. I am sure that many of the poorest people in this country would love to have to worry about the type of nutrition that they got; most of them have to settle for what they can afford.
The Government do not call the money given to bankers a handout, but that is what they call the money given to local councils. They do not call their tax cuts for millionaires a handout, but that is the term they use for the money they give to local councils to run essential services. This is a Government without a proper sense of direction and without a proper sense of right and wrong. We will continue to monitor the effects of the Bill. We will press our amendments to the vote, and we will ensure that the plight of the poorest people who are being hit by these provisions is not forgotten. It is for that reason that I urge my hon. Friends to vote in support of new clause 5.
Andrew Stunell
I should like to remind the House that, contrary to some of the wild assertions from the Opposition, the Bill represents a major step towards bringing power back to local government and local communities. The business rates retention scheme, the localisation of the council tax benefit system and the return of the power to set discounts and reductions in council tax for empty homes and second homes are all measures that the previous Government failed to introduce, notwithstanding a lot of hot air about what they might have done or would not do, as the case may be—
Mr Raynsford
On a point of order, Mr Deputy Speaker. The Minister has made a factually incorrect statement that I would not want to remain on the record without giving him the opportunity to reconsider it. I hope that he will therefore take an intervention.
Mr Deputy Speaker (Mr Lindsay Hoyle)
The right hon. Gentleman has pointed out that he believes the Minister’s statement to be incorrect. It is up to the Minister to decide whether he wishes to give way. I do not think that he is willing to do so at this stage, but I am sure that the right hon. Gentleman will try again.
Andrew Stunell
Thank you, Mr Deputy Speaker. I am sure that the opportunity to give way will arise, and I shall certainly do so in due course to those who think that there is anything to be said against our view that the Bill represents a significant localisation for local government and local communities. The return of business rates to local authorities, the capacity to set council tax without having capping limits set by the Secretary of State, and the transfer of the benefits system to local authorities are all significant measures.
I want to restate my point about the return to local authorities of the ability to set council tax discounts. If every local authority chose to exercise the changes that are being passed into their hands, that would generate for English local authorities a total of more than £400 million. There is no direct connection in the Bill, but I want to make it clear that, whatever might be said about the proposals in the Bill, that discount change will be of significant benefit to local authorities.
I shall deal with some of the points raised in the debate. The right hon. Member for Greenwich and Woolwich (Mr Raynsford) suggested that we ought to accept at least some of his amendments, simply because they were already in the Government’s plans. Well, it is because they are already in the Government’s plans that we do not need to accept them. Some of his other amendments were intended to dismantle the Bill and its provisions, but I made it clear that this is not just a localism measure but a component part of putting our finances right. At no point have we disguised the fact that localisation and deficit reduction are both involved in the proposals.
Andrew Stunell
I am happy to give way to the hon. Gentleman, even though he could not find the time to be present earlier.
Graham Jones
I am very grateful to the Minister for giving way. He keeps using the word “localisation”, but it is obvious that what he is doing is localising cuts. He has spoken about raising £400 million and about the empty homes premium and the council tax discounts. Why are central Government being prescriptive about such measures? Why are they stating that homes must have been empty for two years? Why will they not give local authorities the power to decide how long a home needs to have been empty in order to qualify for the empty homes premium?
Andrew Stunell
The flexibility on discounts will apply to all empty homes from day one, not just to those that have been empty for two years. The two-year condition relates to the empty homes premium, which is a separate provision that is being put in the hands of councils by the Bill.
The hon. Member for North Durham (Mr Jones) made some interesting points, but he did not seem to be aware that, whereas Wokingham has the capacity to generate £700,000 extra income, Wigan, which he mentioned specifically, has the capacity to generate £2.2 million from the discounts. If Wigan chose to implement those measures, that would completely offset the funding gap he talked about.
To be clear, much of the shroud-waving from the Opposition is completely misplaced. It was strange that the hon. Member for North Durham argued—although he tried to back out of it—for additional cuts in council tax benefit for pensioners, because he wants councils to have the flexibility to switch their spending on pensioners to others whom he thinks are more worthy of protection. That is a point of view, but it is not one that the Government share.
I have a lot of time for the right hon. Member for Wentworth and Dearne (John Healey). He served time in the Treasury, during which I believe he was party to the introduction of the 10p tax rate—[Interruption.] We all have skeletons we wish we could keep in the cupboard. When it comes to protecting the low-paid, it is this Government who have raised tax thresholds for low-paid people, many of whom are women, of course, and will take 2 million people out of tax over the next three years.
The right hon. Gentleman did get round to welcoming the localism measure, but—not for the first time—he wants localism, but not yet. The Opposition do not have a strong track record on localism, but they have realised just how important it is to the people we represent. They now pay lip service to it at every opportunity, but I see no sign that it goes beyond lip service to their agreeing to implement localism in practice. At every turn, they try to delay, dismantle and divert the successful attempts of the Government to localise decision making and give local communities the power to take decisions about their services.
I answered the right hon. Gentleman regarding Rotherham’s figures. He mentioned Barnsley, and its figures are an almost exactly equal balance, just slightly in favour of Barnsley, with £1.6 million in each direction. He also waxed lyrical about the new clause 2 single person discount. Some 29% of households are single person, and another 7% are single-parent households. I do not believe that he would want to put those people under additional pressure. The Government do not accept that new clause 2 is the way forward.
The right hon. Gentleman also made an interesting point, of the kind that only a former Secretary of State might make, about what would happen if a council tax referendum failed and the impact that would have on the scheme. The scheme that a local authority sets up by 31 January each year will have statutory force and cannot be changed for the following 12 months, so it would be required to be considered in any reduced budget. Of course, when a local council sets up its scheme, it will be with the full knowledge of its intended settlement. As I say, the right hon. Gentleman welcomes localism, but he does not want it yet.
I draw to the attention of the hon. Member for Warrington North (Helen Jones) one of the documents we published last week, “Localising Support for Council Tax: Vulnerable people—key local authority duties”, which sets out clearly the factors that a local authority needs to have in mind when it exercises its discretion and introduces a scheme. When she studies that, she will find that many of the questions that she raised are answered and her concerns are dealt with.
The hon. Lady commented on the introduction of the Welsh Assembly clauses. She will know from what the Government said previously that we took the time to consult with our colleagues in the Welsh Administration, and it is at their behest that the clauses take their present form. That is an example of the Government taking a measured approach, consulting with the relevant bodies and introducing proposals entirely in accordance with the Welsh Administration’s views.
The hon. Lady also drew attention to an amendment on consulting with those affected. There is a requirement on local authorities, when they have drawn up their scheme, to consult with those whom they believe will be affected. That clearly will involve a consultation with all the groups the hon. Lady mentioned.
Mr Clive Betts (Sheffield South East) (Lab)
I apologise for not being here earlier, but I was at a Select Committee meeting.
My right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) apparently raised the point about the time local authorities will have to propose a scheme, consult on it—as the Minister has just described—and then get their providers of services, such as Capita, to design the schemes and implement them. In January, Capita raised concerns about the time constraints that it would face and its real worry that it would have inadequate time to do that. Is the Minister convinced that local authorities will have adequate time and that there will be no problems with the delivery of services to constituents?
Andrew Stunell
That is exactly why we produced the statements of intent—to give local authorities and their providers the longest possible time to understand how they might best design and develop a scheme. That is also why we have provided a significant sum of money to assist them in doing that.
The hon. Member for Warrington North also asked about criminal offences being created by the Bill. The Social Security Administration Act 1992 creates several criminal offences in relation to council tax benefit, including an offence of dishonestly making a false statement and one of knowingly making a false statement for the purpose of obtaining council tax benefit. There is a different standard of proof for each offence, as I suspect that the hon. Lady knows better than I do. Greater penalties apply if it can be shown that a person has acted dishonestly.
Helen Jones
Can the Minister explain what the position is when a person has not acted dishonestly? We have asked him several times. He has referred to acting knowingly and to acting dishonestly, but the proposed provisions refer to offences that can be committed other than dishonestly.
Andrew Stunell
I am surrounded by lawyers, and the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), is giving me helpful advice, but let me say that there are two separate categories, which I think the hon. Lady has just restated: dishonestly making a false statement and knowingly making a false statement for the purpose of obtaining council tax benefit. To underline a point I made when introducing the debate, those provisions mirror and replicate the existing situation as far as the council tax benefit fraud prevention scheme is concerned. Another relevant point I made earlier is that we are conducting a full review to ensure that what is put into the new scheme is wholly proportionate to the new situation.
‘Schedule 1B | Section 13A |
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following:
New clause 6—Determination of central and local shares—
‘(1) In determining the central share and the local share for any relevant authority, the Secretary of State must have regard to—
(a) the level of need in that authority, and
(b) the likely capacity of the authority to benefit from business rate growth.
(2) Any assessment of the level of need shall include—
(a) the ranking of the local authority in the Index of Multiple Deprivation,
(b) the level of unemployment within the authority’s area,
(c) the proportion of adults within the authority’s area who have a limiting long-term illness,
(d) the number of adults within the area who are in receipt of social care,
(e) the number of looked-after children within the authority, and
(f) the level of child poverty within the authority’s area.
(3) The Secretary of State must lay his assessment before the House at the same time as the Local Government Finance Report.’.
New clause 11—National business rate policy changes: consultation—
‘The Secretary of State may not make any changes to national business rate policy which impact on local business rate yields without first consulting with all interested parties.’.
Government amendments 15 to 17.
Amendment 62, page 12, line 13, schedule 1, leave out ‘each year’ and insert—
‘each financial year until the end of the financial year beginning 1 April 2014’.
Government amendments 18 and 19.
Amendment 63, page 23, line 40, at end insert—
‘(ca) by reference to the volatility caused by rating appeals following a revaluation;’.
Government amendments 20 to 41.
Government new clause 8—Payments to and from authorities.
John Healey
I rise to speak to new clauses 1 and 11, and amendments 62 and 63.
My purpose with new clause 1 is to encourage the Minister to confirm, on behalf of the Government, that the necessary powers exist in legislation to make tax increment financing work in future, and also to confirm Ministers’ intent and commitment to using those powers. The case for TIFs—tax increment financing schemes—is unarguable. I myself have been arguing it for a number of years, first in the Treasury and then in the Department for Communities and Local Government. There are local government regulations in Scotland to allow six TIF pilots to go ahead. The use of TIFs is widespread in Canada and the US, particularly in areas where regeneration is required; indeed, only one state in the US—Arizona—does not have TIF legislation. TIFs build on the commitment that Labour made in government, in the Budget 2010, a commitment that was backed by a capital down payment of £120 million.
However, if the TIFs system is to work—that is, if local authorities are to borrow money for up-front infrastructure investment against the anticipated increase in business rate income as a result of the new infrastructure —there must above all be certainty for those long-term investments to be made. There needs to be certainty for a clear business plan and then an investment plan to be put in place; otherwise TIFs will not get off the ground and will not work. That certainty is required over a 20 to 30-year time scale, which is why it is needed in legislation. As the Centre for Cities said in response to the Government’s consultation:
“When the Government introduces Tax Increment Financing…it should be based on ‘Option 2’—a ringfenced TIF which is best suited for local investment finance within the proposed business rate retention system.”
That point was echoed by the British Property Federation, which said:
“Failing to ring-fence the income stream for that length of time”—
its submission referred to a 25 to 30-year period—
“would generally render the upfront investment unbankable, because the risks associated with it become too difficult to model, understand and price. TIF will only work with the sort of total ring-fencing proposed under Option 2”.
The Government made the commitment to ring-fencing, stating in the White Paper of October 2010:
“We will introduce new borrowing powers to enable authorities to carry out Tax Increment Financing”.
In response to the consultation, the Government also made a commitment to
“allow a limited number of Tax Increment Financing Projects to be exempted from any levy and reset for 25 years.”
That is the crucial commitment that I want to test against the content of the Bill before us. I expressed my concern about the freedom of the ring-fencing from any effects of reset to the Secretary of State on Second Reading on 10 January. He had no answer: either he did not know, or he did not want to say.
Let me therefore point the Minister to the source of my concern, which relates to paragraph 37(1)(d) of schedule 1 on page 32. This deals with the regulation-making powers of the Secretary of State, referring to regulations that can
“provide for that amount or that proportion to be disregarded for the purposes of calculations under any of the following provisions”—
in other words, regulation-making powers that can lead to the disregard of a proportion of business rates in specified areas, namely TIF areas, for particular payments that would otherwise be due. The provision goes on to identify payments to the central share, payments by billing to precepting local authorities, levy payments, safety net payments, payments on account and payments that follow from changes either to the local government finance report or to an amending report of a local government financing report. There is no power, however, to make regulations to exempt payments as a result of changes through a reset.
If I am mistaken, I would like the Minister to indicate where that power lies. If no such provision exists in the legislation, will he confirm that the Government will honour the commitment they made in their response to the consultation and will amend the Bill so that any payments resulting from a reset can be disregarded—and disregarded in full—for the purpose of the TIF areas? The Minister would be welcome to accept my new clause if he needs to do so.
Mark Field (Cities of London and Westminster) (Con)
The right hon. Gentleman has made admirably clear his concerns about the potential lack of commercial certainty. One of the advantages of going down the route of tax increment financing is that there would be ring fence over the 25 to 30-year period. Does he not see, however, that in very uncertain economic times, that is a very long period, so it might be unwise, where a major change required a major reset in a particular area, perhaps where new towns were being built, not to allow the Government a certain amount of leeway? Is that not more important than the exclusion of a reset from the ring fence?
John Healey
I would have thought the hon. Gentleman, who represents the Cities of London and Westminster, would recognise more than anyone else that for the sort of commercial investment required to get TIFs off the ground in circumscribed and specific areas, certainty is a premium. If the 25 or 30-year commitment required to make this work could be periodically completely set to one side in a reset process, I put it to him that the inherent risk created by that and the inherent lack of certainty entailed by it would undermine the ability to raise the finance necessary to get the TIFs off the ground.
As to the hon. Gentleman’s point about new towns, the regulations allow the disregard in the specified areas that are designated as TIF areas only. The disregard on business rate payments, a proportion of which would otherwise become payable by the local authority, would be allowed under various headings, but this would not apply to the reset. Fundamentally, that is the biggest upset factor of all, so the case for disregarding that is probably stronger than it is for the smaller-beer measures for which regulations can be designed to protect.
Mark Field
I accept what the right hon. Gentleman says and he is absolutely right about commercial certainty, which is of great importance to any would-be investor. Instead of the notion of absolute certainty embodied in new clause 1, would the right hon. Gentleman not be satisfied, particularly in view of the important effect of building a new town or a huge new industrial estate for which the notion of a reset would apply, by reassurances from the Minister that the Government do not intend to make the changes he has in mind? Would that not be better than going down the route of absolutely certainty, which provides little flexibility either to central or local government, for an incredibly long period of 25 or 30 years? We need go back only two and a half or three decades to recognise the great changes that have taken place in many of the industrial areas that we represent and to understand that absolute certainty of the sort that he—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. [Interruption.] Order—the hon. Gentleman must not test my patience even more. Interventions are welcome, and I am prepared to give a little leeway, but the hon. Gentleman is almost making a speech.
John Healey
Thank you, Mr Deputy Speaker. I got the gist. I welcome this Bill and I want it to work. My fear is that without the certainty around potential resets—we do not know when or how often they might happen; we do not know whether they will happen every 10 years; we do not know how they will work in future—there will be huge risk and uncertainty in the system. It is not a question of whether I am satisfied by the provision; it is a question of whether the potential investors, who will determine whether the TIFs work or not, are satisfied. I am trying to convey the sentiment that I have picked up from my discussions with banks, commercial organisations, the British Property Federation and some of the City’s policy experts, who all say, “Look, we require a ring fence; it must be total”. Thus leaving out the reset, which the Government promised they would not do, does not make sense if we want the provisions to work. I hope the Minister will be able to provide the confirmation we need and be able to build it into the Bill. This issue will certainly need to be confirmed at later stages of the Bill.
Amendment 62 is designed to get to the heart of the relative share of the business rate take as between central and local government. The figures for projected resource spending on local government under the current spending review demonstrate a significant reduction for next year and the year after that—of nearly half a billion between this year and the next, and of more than £1.5 billion between next year and the year after that in nominal terms. Alongside that, the projected yield from business rates is set to go up by nearly £1 billion next year and by more than half a billion the year after that. That means that the gap between the projected business rates yield and central Government’s commitment to resource spending on local government is more than £2 billion for next year, and £4 billion for the year after that. There is a significant and growing gap between the business rates yield and spending on local government.
Andrew Gwynne
It is not yet clear how local authorities’ needs will be assessed for the purpose of determining the proportion of the business rate that they will retain. We need to see the bigger picture, not least because services and needs vary widely, as does the ability to generate income locally.
John Healey
My hon. Friend, who has experience of local government, has put his finger on the button. What worries me is that the Bill gives the Secretary of State power to set the central and local shares—in other words, to determine the division of the business rates take—in each and every year, indefinitely. I am not talking just about what will happen next year and the year after that, or about what will happen until the end of the current spending review period. From year to year, local government simply will not know where it stands until the Secretary of State makes the decision. The central and local shares could vary, and central Government could decide to take a greater share.
The Government’s top-slicing of at least 50% of the business rates revenue and 50% of the business rates growth above the baseline will reduce the incentives for local authorities to support growth, which were meant to be part of the design of the system. It will also reduce the certainty that would enable authorities to plan their finances on more than a year-by-year basis, and reduce the Government’s own ability to claim that this is a localising reform. I am sure that we will hear from the Minister—and I have heard this before—that the Government have declared their intention of returning the revenues in the central share to local government; but, as has been pointed out by my hon. Friend the Member for Denton and Reddish (Andrew Gwynne), we have been given no details, and we do not know what purposes or constraints that may entail.
Mr Betts
My right hon. Friend has raised an important point about what the Government may choose to do with the extra money from the business rates that will accrue each year. The suspicion has been expressed that they will use it to ensure that local authorities must fund more and more council tax benefits. That would be a simple way of transferring responsibility for benefits to local authorities.
John Healey
My hon. Friend may well be right, and his Select Committee will doubtless keep a close eye on the matter. I hope that the Minister will give us some answers tonight, but I am sure that, if he does not, Ministers in the other place will be pressed on the point.
The other gaping hole in the Bill is the absence of any specific measure that would tell us when and how the Government would deal with the reset in the future. The two options that they presented in their statement of intent last week could lead to fundamentally different outcomes. There could be a full reset, whereby all the business rate growth up to the point of the reset was redistributed—meaning, in effect, that the baseline of the whole system would be reset by means of the new, and total, business rates pot—or there could be a partial reset, meaning that business growth would be retained at local level, and just the initial baseline would be reset. That represents a very wide range of possibilities for local authorities. If the Minister wants authorities to be able to plan for the future on the basis of the new system, he must provide them with some of the answers to such questions, sooner rather than later.
Andrew Gwynne
Getting the reset procedure right is important not least because the initial baseline is so unfair. It locks in unfair local government settlements and in-year cuts. It is crucially important for local government to be certain that the reset procedure will work in the future, because otherwise the gaps will continue to widen.
John Healey
Indeed. I have my misgivings about whether any approach to the reset procedure can make the system fair after more than a few years. Indeed, I am still to be convinced that the system can be reset in a fair and proper way. But, Mr Deputy Speaker, I digress beyond the scope of the amendments that I tabled.
Let me now turn to amendment 63. During earlier debates on the Bill in the Chamber, I argued that this was an unsuitable system for long-term Government funding. Ultimately, business rates yield is too volatile, and it is too volatile on a year-by-year basis. Let me give three examples, a couple of which will be close to home for those on both Front Benches.
In Warrington the business rates yield has dropped by £10 million over the last 10 years, from £53 million to just £43 million. In Sunderland there was a £17 million drop between 2010 and 2011, and in the year before that there had been a £12 million rise. I can tell the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), that in the middle of 2005-06, the business rates income in his borough of Bromley halved. In two of the last four years, the changes—up and down, and up and down again—have amounted to more than 10%. The funding stream is inherently volatile, and, in my view, is inherently unsuitable as a basis for the funding of essential local government services.
The main purpose of amendment 63, however, is to draw attention to concern about the volatility caused by appeals. I believe that areas in which there is a particular concentration of a single or consistent business type are particularly vulnerable to a big impact from them. The hon. Member for Cities of London and Westminster (Mark Field), who has just left the Chamber, may recall that in 2007-08 a full 20% of the business rates yield of the City of London was lost as a result of successful backdated appeals. So the appeals add another important, volatile element to the system of business rates.
Those appeals are made against decisions by the Valuation Office Agency, not local authorities. The system is managed by the VOA and tribunals, not the local authority, and it brings benefits to the companies that are successful, not the local authorities. We must ensure that the impacts of appeals do not affect the funding base of the local authorities; we must not expose authorities to vagaries in the system and to the impact of appeals, when they cannot predict them, control the risk of them or benefit from them. Actually, neither can they benefit from business rate increases through revaluation, at least while the Government put in place transition relief.
I tabled amendment 63 because the Government are creating a one-way bet, in which the Chancellor wins each way and the councils lose each time. If the appeals are won by the company, the local authority has to manage the volatility and has to bear the loss up to the level of the safety net threshold—which, according to the statement of intent in the Government’s publications of Thursday last week, is likely to be somewhere between 7.5% and 10%. Amendment 63 is an attempt to make sure that once the calculations and the thresholds are determined, safety net payments take full account of rating appeals. Linked to that, I hope the Government will accept the case for fully compensating local authorities from the levy pot for the impact of any successful business appeals—over which they have no control, and which they cannot predict.
New clause 11 is relatively modest, and I hope the Minister will accept it in principle, if not in practice at this stage. The power for setting and changing business rates policy—business rate reliefs, which are mandatory, as well as the payment schedules for business rates and the transition periods for business rate increases—will continue to rest with the Secretary of State and the national Government. Currently, any national business rate policy changes have no direct impact on local authority finances or local authority budgets. In future they will, however. They will not be local government decisions, but they will create consequences that local government will have to deal with. If the Government decide to change the rate or the type of mandatory rate reliefs, or to allow the deferral of part of the change in business rate bills, that will have a direct impact on that year’s yield in the area concerned, and therefore on the local authority’s funding. Local authorities will be hit by the consequences of decisions that they did not make and that they cannot control. That is unfair and unreasonable.
It may surprise some Members to learn that the Federation of Small Businesses has also made that argument. It said in response to the consultation of October 2011 that
“the FSB is concerned that the incentive system could actually deter local authorities from promoting and utilising the reliefs available to small businesses such as small business rate relief, rural rate relief and hardship relief…It would mean that a local authority would lose out on income if it increased the proportion of businesses that received rate relief or would make money if the number of businesses able to get reliefs fell.”
I am sure the Minister does not want to design into the new system perverse incentives that will hit small firms in that way.
As currently proposed, the new system will be bad for local authorities, and could be bad for local small and medium-sized firms. My new clause requires that, at the very least, the Secretary of State must consult the parties that would be affected by changes in national business rates policy before making such decisions. Under the new system, the stakes for councils will be higher, so the guarantee to consult them before any changes are made is the minimum that Ministers should promise.
Helen Jones
Once again, I am very pleased to follow an interesting, passionate and well-informed speech from my right hon. Friend the Member for Wentworth and Dearne (John Healey). I can add little to the case he made for his amendments, so, given the time constraints, I shall focus on new clause 6, which stands in my name and that of other right hon. and hon. Friends.
We make no apologies for returning to the issue of need and the different levels of need within local authorities —the elephant in the room that the Government want to ignore. This issue has been raised time and again in our debates on the Bill by hon. Friends, many of whom represent some of the most deprived communities in this country and have seen at first hand the impact of the Government’s policies on those communities.
Why are the Government so wilfully blind to the effects of their policies? They have already hit local authorities with cuts that are larger than those inflicted on any Government Department, and we have heard from Opposition Members about the real and serious impact the cuts are having on front-line services—the cuts in school food provision, increases in home care charges, library closures in the poorest communities. However, none of this has any influence on Ministers, so out of touch are they with most people’s lives, and it now appears that they are going to make things worse.
First, they entrench unfairness in the system by basing it on the current local government finance settlement, so the inequalities and unfairness of the current scheme will form the basis of the settlement for years to come. We have heard many times during our debates on this Bill about cities that are losing spending power: Manchester is losing spending power of £186 per person, Birmingham £155 and Nottingham £147. Those are the cities that the Government think will drive the economic recovery; there is no linked-up policy here. Wokingham, of course, gains, however. Basingstoke and Deane gains £6.30 per person. East Dorset gains £3 per person.
According to the Government’s statement of intent—it is one of many, so I am unsure how much weight we can place on any of their statements of intent—each authority will keep 50% of its business rates and the Government will provide a revenue support grant to make up the difference between the local share of business rates at the outset of the scheme and the spending controls for local government. However, they will, it seems, have top-sliced that for the new homes bonus first, which already benefits most those authorities with a high tax base, and it appears that many other grants will also be included, as listed in the statement of intent.
We already know how the grant system has been used to penalise the poorest authorities with communities that are most in need, and there has been a significant reduction in resource equalisation. Under this scheme, the gap between richer and poorer authorities will widen. First, as the Yorkshire and Humberside councils have said,
“a baseline may not reflect the actual levels of funding councils need to deliver services from April 2013.”
They were right about that. Secondly, as we have discussed during the passage of this Bill, some authorities will find it easier to grow their business rates than others. It has been estimated that even if the top-ups and tariffs increased in line with the retail prices index, the gap between the richest and the poorest authorities, and between the north and the south, will widen. Cash growth in the City of London could be 139% over four years and the figure for Westminster could be 90%, whereas the estimate for Liverpool and Knowsley is 21.9% and that for South Tyneside is 22.7%.
When we add into that this Government’s abject failure to take into account the differing tax bases of local authorities, the situation becomes even worse. That failure means that local authorities do not start on the level playing field that the Deputy Prime Minister kept telling us about—although he was the man who said he was not going to raise tuition fees, so I am not sure that anyone takes much notice of him. In the long term, fortunate local councils might reduce or even get rid of council tax, whereas others whose tax base is low and where it is harder to attract investment will be unable to do so. When we also take into account the amount that some councils will lose through changes in council tax benefit, it is clear that they could be heading for the perfect storm.
Andrew Gwynne
May I use the example of my constituency to illustrate precisely the issue that my hon. Friend is raising? My constituency covers two metropolitan boroughs that lie side by side; Tameside predominantly contains band A and band B properties, so its ability to increase its income from council tax is less than that of neighbouring Stockport, which contains a much larger amount of properties in a wider range of bands. Is that not the fundamental unfairness of all this?
Helen Jones
It is the fundamental thing that the Government fail to understand: councils are not starting from the same baseline. Those who pay the price for these inequalities, which will increase, are those most in need. Need is the thing that the Government do not want to talk about. That is why our new clause 6 seeks to require the Government to take into account both the likely capacity of an authority to benefit from business rate growth and the authority’s level of need.
When the Secretary of State issued all these statements of intent last week, he sought to dismiss the whole concept of need. He talked of grants as a
“system of Government handouts to local authorities”.
He said that this
“encourages a begging bowl mentality, with each council vying to be more deprived than its neighbour.”—[Official Report, 17 May 2012; Vol. 545, c. 39WS.]
I have never heard such an appalling slur on local councils or such an arrogant dismissal of the needs of many of the poorest people in this country, and he should apologise for that. Is he really suggesting that councils are pretending to represent areas that are poorer than they actually are, simply to get Government grants? That is nonsense. So why is it that under this Government the needs of people who are out of work, of people who have long-term illnesses and of people in poverty can be treated as if they do not exist? These people do not have loud voices, because most of them are just trying to get by from week to week. They do not share mulled wine and mince pies with the Prime Minister or get invited to dinner at Dorneywood. By contrast, those who pay 50% tax—millionaires, who are apparently squeezed beyond endurance—must be relieved of their burdens. [Interruption.] The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill) says that that is a cliché. It is not a cliché; it points out the moral laxity of this Government, who cannot see that treating poor people unfairly while giving handouts to rich people is exactly what most of the country finds wrong.
Andrew Gwynne
My hon. Friend is making precisely the point that needs to be made in these debates, which is that the demands on local services vary widely and that it is often the poorest communities that have the greatest demands. I am very pleased that her proposal recognises children in care, because they are a big issue for local authorities in need. That argument needs to be made in this debate.
Helen Jones
My hon. Friend is right about that, and I shall discuss the number of people in care later. It is important that we recognise that many of the things we are discussing are statutory services, which the local authority has to provide.
Let us examine some of the differences between areas. In Knowsley, whose case was put forcefully in Committee by my right hon. Friend the Member for Knowsley (Mr Howarth), 58,000 people—more than one third—live in areas that are among the top five most deprived in the country. In the north-east, 32.7% of people live in the most deprived 20% of areas. Those are the areas that will struggle as the gap between needs and resources widens. Such authorities are often the same ones that are having to cope with the biggest increases in unemployment. That both reduces the finance available to local councils, because more people are claiming benefit, and increases the demand for their services.
The Secretary of State seems to think that authorities are competing to be the most deprived, so let me ask him something—I would if he were here, but he seems to take these debates so lightly that he has not even bothered to turn up for most of this one. So let me ask this Minister: is unemployment in Birmingham, Ladywood higher or lower than in Henley? In Birmingham, Ladywood, it stands at 11.2%, whereas in Henley it is 1.1%.
Does Middlesbrough have a higher or lower unemployment rate than North East Hampshire? Middlesbrough’s rate is 9.7%, whereas that for North East Hampshire is 1.1%. Is the figure for Liverpool, Walton higher or lower than that for Wokingham? The figure for Liverpool, Walton is 8.5%, whereas that for Wokingham is 1.3%. Does he think that councils are making this up and deliberately causing unemployment to get Government grants? Not even he could get up to argue that. It is not local councils that have caused this recession, yet still we hear from Government Members that councils are “reluctant” to promote economic growth. Coming from this Government that is a bit like King Herod accusing someone of child cruelty. Local authorities are still having to cope with the long-term legacy of heavy industry, followed by de-industrialisation.
Stephen Pound (Ealing North) (Lab)
I am loth to interrupt my hon. Friend, who is making a powerful and passionate case that I have no doubt will sway even those stern Gradgrinds on the Government Benches. Does she accept that constituencies such as mine have islands of deprivation in a sea of affluence and that we have a post-industrial working class in parts of west London? Is it coincidence that the royal borough of Kensington and Chelsea has the longest life expectancy of anywhere in the United Kingdom, whereas places such as her constituency and mine are at the other end, not through any fault, but because of industrial history? What can be done to address this cruelty?
Helen Jones
My hon. Friend is quite right. In the first place, we could ensure that we address those legacies of ill health and poverty, which create a greater demand for services and mean that fewer people are able to contribute to them. For example, why does Durham council need to spend more on older people than a similarly sized council such as Surrey? It is not because it is profligate, but because it has higher deprivation and ill health, which lead to greater demand for home care services but mean that fewer people are able to finance that care. Fifteen times as many people receive a community service in Durham as in Surrey and two and a half times more receive a home care service. That demonstrates the huge variation in need across the country.
Those levels do not bear any relation to an authority’s ability to generate income. In Surrey, for example, 75% of the properties are in band D or above. Surrey can generate more income from band D council tax than a similarly sized authority, which is a point that was made earlier. Unless those factors are taken into account in any financial settlement, there is a huge risk to services for those in need.
Andrew Gwynne
The question of developing local economies also does not take into account the relationship between city regions. Often the drivers for economic growth might be outside a borough’s boundaries, or in a neighbouring local authority to which people will travel for work.
Helen Jones
My hon. Friend is quite right and that is true in many conurbations, such as Manchester and London, for example.
Let us also consider the need for children’s services. Levels of child poverty, and thus the demand for services, vary hugely between authorities. In Hartlepool, 29% of children are in poverty. In Newcastle, the figure is 27%, as it is in Liverpool. That is 91,000 children. I could not resist looking at that often mentioned authority, Wokingham, where the level of child poverty is 7%. Which area has the most need for services, yet which is benefiting most and is likely to benefit more from this Government’s plans?
Such high levels of child poverty mean a higher demand for children’s services. In Liverpool, for example, 77% of the children in poverty are in single-parent families, meaning there is an even greater need for child care and support for families to help parents go to work, as well as for other support. Children in those areas need better service, not worse, and they need more help. There is no point in the Deputy Prime Minister’s banging on about the need to address inequalities in education unless the Government recognise that to make a real difference those inequalities must be tackled before children get to school.
So, we have places such as Middlesbrough—the hon. Member for St Austell and Newquay (Stephen Gilbert) is shaking his head, but anyone in education knows that to make a real difference to educational attainment we need to tackle the inequalities before the children reach the age of five. By the time they get to school, those inequalities are entrenched and, if he does not think that that is true, I suggest he asks some teachers.
Middlesbrough is the ninth most deprived local authority in England and has seven times as many children receiving free school meals as Wokingham does. It clearly needs greater investment in children’s services. Poverty also drives the number of children being taken into care. We spoke earlier in the passage of the Bill about the huge increase in the number of referrals and children taken into care following the case of baby Peter, but the differences between authorities are stark. There was a 10% increase nationally in safeguarding referrals in the period around 2009-10, but in Liverpool the increase was 60%. Those are the differences that we are dealing with. The same applies to the numbers of looked-after children—children for whom the authority has a legal obligation to be the corporate parent and to provide. It cannot cut those services, it cannot trim them and it cannot decide how great the demand is.
Andrew Gwynne
I ought to declare an interest, as my wife, Councillor Allison Gwynne, is the cabinet member for children’s services in Tameside council. My hon. Friend’s point about children’s services and the cost of those services is absolutely correct, not least because children’s services, particularly for looked-after children, is such a resource-intensive service and cannot easily be cut, nor should it be. It is those councils that often have the least ability to raise business rates that are likely to be penalised the most.
Helen Jones
I could not have put it better than did my hon. Friend. These services are demand-led; they are not within the control of the local authority, and they are, as he said, very expensive to provide, as they must be. We are dealing with some extremely damaged and vulnerable children in local authority care. Surrey has 32 looked-after children per 10,000 of population, and Wokingham has 22, compared with 104 per 10,000 in Middlesbrough and 100 per 10,000 in Newcastle. That is a stark example of the differing levels of need in local authorities, and the idea that those services should be left to the vagaries of the market is breathtaking.
My right hon. Friend the Member for Wentworth and Dearne, who is no longer in his place, gave some good examples of how business rates can vary from year to year. It is entirely unpredictable, yet this Government still refuse to recognise those different levels of need within local authorities.
Mr Betts
Am I being a little cynical when I say that the Government have devised a scheme that is now so complicated—top-ups, tariffs, set-asides, then revaluations, and on top of that the fact that only 50% of business rates will be returned to local authorities, and a rate support grant element as well—that when they achieve what they are trying to do, the transfer of money from deprived communities to more affluent communities, it will be virtually impossible to explain to anybody what they have done?
Helen Jones
I do not think my hon. Friend is at all cynical. He is exactly right. The whole point of the Bill, as we have said throughout, is to centralise power and devolve the blame. We saw it earlier when we were debating council tax. We are seeing it now in the Government’s plans for business rates. I believe their aims are simple. They go about it in a complicated way, but the basic aim is very simple: to ensure that whoever gets the blame for cuts in local services, it is not them. It is also to ensure that the voices of those who are most in need are excluded from this debate.
We believe that the views of those people ought to be heard. Let us think about who they are. They are elderly men and women who have contributed all their lives and who are not getting the home care that they need in their old age, or are paying too much. It is a child in a family who may not be well-off but is dependent on local libraries for his or her education. It is the most vulnerable children in need of care and protection. These are the people to whom this Government pay no heed. We have moved the new clause because we do not intend their needs to be forgotten. I urge my hon. Friends to support it in the Lobby. It might help if I indicate that we will press it to a vote.
Pat Glass (North West Durham) (Lab)
Perhaps it is a sign of the complexity of the subject and the fact that we have not exactly taken the nation with us that there are so few Members in the Chamber tonight to discuss local government funding. We ought to remember that local government funding underpins local authority services, which support our most vulnerable people—the elderly and the disabled—and that it is women who are the heaviest users of local authority services and who are hardest hit when services are cut or funding is changed. Any changes to local authority funding need to be considered carefully and time must be taken to ensure that all intended and unintended consequences are known before those changes are made, not after, but adequate time and proper consideration are precisely what the Government’s proposals are lacking.
We heard only this morning that nine of the 10 poorest areas in the country are in the north-west, and the 10th is in the north-east. We know that Government cuts to local authority funding have already led to every person in the average north-west local authority losing £133. Every person in my local authority has lost £70, yet every person in deepest deprived Surrey has gained £2.
Because of the complexities of local government funding, even slight changes in one area often have major impacts elsewhere. We are beginning to see clear evidence that the pupil premium, although well intended, is responsible for a shift in funding from the poorest areas to the most affluent, and from schools with high concentrations of children on free school meals to schools with lower concentrations of those children. The Government have already signalled their intention to shift health funding away from need and deprivation and towards the elderly population. That will have an impact on areas such as mine that have high concentrations of people who, because of our industrial heritage, are in need of health provision and live in deprivation, because the funding will be transferred to areas in the south where the more affluent and the elderly live.
Now the Government propose changing business rates, which will simply carry on their work of siphoning funding from the poorest areas to the most affluent. Those policies on business rates are not new or untried; they were used in the USA in the 1990s and resulted in cities such as Detroit and New Orleans becoming derelict, because everyone who could move out did so and left the cities to the poorest and most vulnerable. The Government’s proposals on business rates take absolutely no account of the ability of individual local authorities to raise rates without the support of the Government.
The Government’s proposals also take no account of geography. Any area that is not within the golden triangle of south-east England, northern France and Germany needs the support of Government infrastructure to attract businesses and business rates. We have heard tonight how, as a result of these proposals, the City of London will see cash growth of almost 140% over four years, yet places such as Liverpool, Knowsley, Bury, Wirral and south Tyneside will see cash growth over the same period of about 20%.
The Government’s proposals take no account of the number of children living in poverty in a local authority or the number in need of local authority care and protection. They take no account of the number of elderly poor, the quality of housing or the number of people living in substandard housing or with chronic ill health. They do not take account of what local authorities need to spend; only of what they can raise.
I am asking the Government to agree to carry out and publish an independent assessment of the needs of different local authorities before deciding how much of their business rate they can keep. Local authority funding formulae are complex and any review must be properly handled and carefully considered. I know that the Government do not do detail, but that is what local authority funding formulae are all about. If they get the detail wrong, they will cause chaos for our most vulnerable people.
I remember that some years ago the previous Government were levering additional funding for schools, but the schools were saying that they were not getting it. Treasury civil servants initially pointed the finger at local authorities and said that they were creaming off the money. There was naming and shaming of local authorities, which came out very firmly and screamed that they were not creaming off the money. The civil servants looked again and then pointed the finger at special educational needs, saying that the growth in the SEN sector and its increasing cost was draining money that had been meant for the schools. A proper review found that it was not special educational needs, but a Treasury anorak—[Interruption.] I am sorry, but Ministers should listen to this, because it is important. It was a Treasury anorak who tweaked the system in one area and caused a Mexican wave in another. Local authority funding is complex. If the Government do not take the time to consider it properly, the most vulnerable people in our society will be the most affected.
The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
I agree with the point that the hon. Member for North West Durham (Pat Glass) makes: local authority funding is complex. I spent 16 years in a local authority and another eight on the Greater London authority dealing with funding issues, so I say to her gently, because I recognise the sincerity of her point, that the instance to which she refers occurred on the previous Government’s watch. Despite her indication that it was a risk in the system, it was a risk because of the opacity and complication of the funding system and the operation of the formula grant, which this Government inherited and are changing. I understand that there is a problem, but this Government are fixing it.
Robert Neill
I am going to make some progress if the hon. Gentleman will forgive me—[Interruption.] Very well, I will give way on that point, but I may not again.
Mr Betts
The Minister says that the system is being reformed because of the complications of the current system. The Secretary of State, in his initial statement to the House, said that the Government’s objective was to create a new and simpler system. Does the Minister think that the Government have achieved that objective?
Robert Neill
Compared with formula grant that the Labour Government left behind, yes I do. That view was shared by the Lyons inquiry, which the previous Government very conveniently buried because it did not suit their purposes.
Might I now turn, Mr Deputy Speaker, specifically to the two sets of amendments and new clauses before us? I am sorry that the right hon. Member for Wentworth and Dearne (John Healey) is not in his place, because he made a thoughtful and well considered speech. I had the pleasure of shadowing him for a time and I respect his concern about the matter, so in fairness to his arguments, I will deal with the points he made.
New clause 1 relates to the operation of set-aside and the position of tax increment financing schemes—TIFs. The Government are committed to making TIFs option 2, which is what we are talking about, successful. I am glad to learn that when he was in government the right hon. Gentleman was an advocate of TIFs. He was not, unfortunately, able to persuade those further up the governmental pay scale to introduce them, but I do not doubt that he tried hard. This Government are doing what everybody asked and succeeding in introducing them. He is quite right that for TIFs to operate properly there has to be a degree of certainty, but the change he proposes is not necessary because the provisions in the Bill already enable that to happen.
The Government’s intention, as indicated in the White Paper, is that a ring fence exempts TIFs from the calculations of the levy, the set-aside and any reset, and the Bill already permits that. We also intend that, under the system, the additional uplift in rates retained be disregarded when setting tariffs and top-ups, not only in relation to the option 2 TIF scheme, but in respect of enterprise zones. That is why “proportion” is used in the regulations about which the right hon. Gentleman is concerned. The intention for TIFs is 100% ring-fencing, but in relation to enterprise zones, as hon. Members will know, the uplift in rates is retained from a starting point, so there is a proportion. The wording is used simply to cover both types of scheme and to enable both to be ring-fenced.
Mr Raynsford
Given the Minister’s response to the Chair of the Communities and Local Government Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), insisting that the new system is simpler, will he now explain how that mechanism, involving not only the set-aside and the levy but the reset and the differential arrangements in enterprise zones, will work in practice to achieve the objective, which my right hon. Friend the Member for Wentworth and Dearne (John Healey) rightly stressed, of giving investors the certainty that there will be a ring fence?
Robert Neill
I think that the right hon. Gentleman will have to make do with a potted version, given that I have only 10 minutes left and want to deal with other points as well. Suffice it to say that if he casts his eye over paragraph 37(1)(d)(iv) and (vi) of part 10 of new schedule 7B to the Local Government Finance Act 1988 —I know that he will want to do detail as we wish to do detail—he will see that the regulations permit those uplifts to be disregarded.
Those provisions have the same effect as the new clause tabled by the right hon. Member for Wentworth and Dearne would have. The Government have said that it is not our intention to reset the system until 2020, save in exceptional circumstances. I accept that for option 2 TIFs it may well be desirable to have a longer period than that, and the regulations will permit that. Enterprise zones and option 2 TIFs will be disregarded at the reset and could be disregarded for subsequent periods. It will therefore be convenient to align future resets with the revaluation period from 2015 onwards. The system will work perfectly well in practice.
In amendments 62 and 63, the right hon. Member for Wentworth and Dearne fairly recognises that central Government have, and always will have, an interest in public spending. It is unrealistic to think that central Government would not have a macro-economic view on the overall level of control over local government, and that is why we could not accept his amendment and constrain ourselves in the way that is intended. However, we have always made it clear that, over time and particularly once we have the public finances back on track, we hope to increase the proportion of business rates that are part of the rates retention scheme. We are starting at 50%, which is a considerable step forward in giving local authorities greater financial autonomy, and the provisions in the Bill allow the figure to be increased if circumstances permit. Equally, however, one has to be realistic and recognise that in an economically difficult world it would be imprudent to presuppose that the central share could be removed altogether. I do not think that any Government would envisage that. It is conceivable that in dire circumstances the share could be increased, but that is certainly not the Government’s intention; we intend to reduce it as soon as economic circumstances permit. It is therefore appropriate to maintain the existing provisions, which enable the alterations in shares between local and central Government to be considered alongside the need to maintain affordability and to protect the interests of the taxpayer and the wider economy. Whatever the proportion, be it 50% or higher, I repeat the assurance that, as is consistent with the 1988 Act, it remains the case that business rates paid to central Government through the central share will be returned to local government through other grants.
On amendment 63, we are alive to the point that the right hon. Member for Wentworth and Dearne makes, and we will take it on board when drafting final regulations. We are conscious of the potential interaction of the incentive with loss of revenue at appeals, and we have said that we will consult further on that during the summer. We have already scheduled meetings between officials and local authority officials. Against that background, I hope that the he will feel able, albeit in absentia, to withdraw his amendment.
Let me turn to new clause 6 and the related proposals from Opposition Front Benchers. I could not help but note a slightly different tone in the debate when we discussed them. I think that earlier the hon. Member for North Durham (Mr Jones) alluded to one-tune records. With respect to the hon. Member for Warrington North (Helen Jones), a one-tune record is still a one-tune record however long you play it, and I am afraid that that is what we heard from the Opposition Front Bench. It is also, I am sorry to say, a rather inaccurate one-tune record, because when one analyses the hon. Lady’s argument, one sees that it is not only a serious indictment of the system that we inherited from the Labour Government but it does not accurately portray what we are seeking to do. It is a serious indictment of the Labour Government’s record because the list of undoubted differences and inequalities between regions in the UK that she set out is in some measure, if she will forgive my saying so, the legacy of the failed, highly centralist policies of the Labour Government. It is pretty scandalous that after 13 years of regional policy and of a highly centralised local government finance system, the inequalities to which she referred exist. That is what Labour left behind.
The coalition has sought to address that legacy, even within the existing system. First, we have increased the weighting given to the needs element of the formula grant, which precisely reflects those issues, from 73% to 83%—something that no previous Government have done. Secondly, we have introduced transitional grant to deal with authorities in the greatest difficulty.
It is worth bearing in mind that need is built into the calculations in the business rate retention system. Need is part of the calculation of the baseline because the needs element is part of the formula grant, and we have indicated that we will take the 2012-13 formula grant as the baseline. The hon. Lady’s examples of the undoubted cost pressures in social services, child care and so on are, therefore, reflected in the social services element of the formula grant that we have maintained, as well as in the uplift of the needs element that we have maintained. We have placed such authorities in a better position for the starting line.
There are undoubtedly significant and sensitive services that are under pressure. Reference has been made to some of the child care cases that we know about. Those are really tough areas with real cost pressures, but under our system top-tier authorities in two-tier areas, which make up the majority of the authorities that are responsible for adult social care and children’s services, will be designated as top-up authorities. That means that they will be protected from volatility more than any other authorities in the system. They know that their top-up will be fixed for the reset period and index-linked thereafter to the retail prices index. There is particular protection in our system for authorities with the greatest need. The thrust of the Opposition proposals therefore falls at the first point.
We have said that we will share the proceeds and the risks through the 50:50 split between local and central Government. We have said that the baseline will take into account the issues that we have taken on board. We have said that baseline funding will remain fixed and that growth in budgets will be linked to local business rates growth thereafter, but with protections in place. Opposition Front Benchers have shown a schizophrenic attitude to the Bill from start to finish. They have paid lip service to a degree of localism, and they have given examples of over-centralisation that, on analysis, turn out to be the legacy of their own system. They have been in denial throughout about the need to link reform of the local government system with a realistic appraisal of the need to reduce the deficit. They have produced a set of arguments about as dysfunctional as one could find, making them the Simpson family of British politics. We have heard no credible alternatives. They have played the same record time and time again, and they do not have much credibility. I hope that the House will resist the Opposition proposals if they are pressed.
John Healey
Members of another place will study the Minister’s remarks this evening very carefully and return to a number of points. I am grateful to him for his comments about TIF funding, and I was pleased by most, if not all of them. I, too, will study the Hansard record of his comments very carefully indeed. I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
Robert Neill
I beg to move, That the Bill be now read the Third time.
This is a bit like coming out in the play-off final after the brief half-time break at Wembley on Saturday. We just need a little bit more to close the deal as far as this Bill is concerned—[Interruption.] It did not have to go to penalties.
We have had a lengthy and sometimes constructive debate during the Bill’s progress through the House, and it is worth taking stock now. The House has the opportunity to make a considerable game shift in the relationship between central and local government. We are now in a position to move away from what has been, on any independent view—as consistently endorsed by independent experts, going back to Layfield, the Lyons inquiry and the resource review—the unhealthy level of dependence of local government on central Government for income that has accrued over the years. As part of the Government’s localism agenda, we intend to hand back power to local people and the authorities that represent them. I hope that that principle will be recognised by hon. Members on both sides of the House.
I shall set out what the Bill does and its wider context as part of the coalition’s localism agenda. It is recognised that giving greater local control over expenditure and revenue raising is desirable. The principle of business rates retention is therefore supported across the House. Once we drill under some of the rhetoric, there is also a general recognition that welfare spending needs to be brought under control, and that it is right that local authorities should have control over council tax support.
The Bill incentivises local authorities to go for growth, because that is the other part of the agenda that the coalition regards as critical. We need to encourage sustainable growth and the Bill incentivises local authorities to grow their tax base by directly linking financial benefit to the decisions that they take on, for example, planning permissions that lead to more commercial floor space and economic activity, and in the design of their council tax support schemes that incentivise them to get claimants back into work, which is where we all want to see them wherever possible. It enables councils to decide how best to manage their contribution to reducing the deficit. All thoughtful commentators accept that a contribution must be made and that it is more likely to be nuanced and effectively delivered if there is local input into the design of that contribution.
Local authorities will also be given the freedom to decide how to help provide for the most vulnerable in their communities. I hope that no one seriously thinks that any party has a monopoly on concern for vulnerable people in their communities. The Government regard the vulnerable as a top priority, and that is why we have increased the weighting given to the needs element of the formula grant in our financial settlements; why we have maintained that in the baseline; why we introduced transition grants; and why we will ensure that local authorities that deal with some of those areas of greatest cost pressure in relation to adult social care and children’s care will be designated as top-up authorities and will have a degree of certainty about their funding by index-linking and protection from volatility. That is a practical commitment to helping to protect the most vulnerable in society.
The reforms are also part of our wider approach to supporting growth, which is our best hope of having the money that we need to support services for the vulnerable in a sustainable way; to get more people back into work; and to enable us to pay down the deficit, which at the moment ties the hands of central Government in seeking to deliver the services that we all want for our communities. We have made real progress on this front over the past two years. The Bill sets important incentives for business rate retention and helping people back into work through council tax support, but that is linked to other parts of the agenda. We are encouraging local authorities to build new homes, through the new homes bonus, an incentive for both commercial activity and domestic building. Homes as well as jobs are central to the incentives we are putting in place.
The local enterprise partnerships are bringing together businesses and civic leaders to provide strong local leadership and to drive growth. My right hon. Friend the Secretary of State, I and all the Ministers involved in the legislation very much hope that the Bill will not only make technical changes but bring about an attitude change in the relationship between local government and their business communities. Many of our competitors have a much closer relationship between their local authorities and the big economic drivers, but that has not always been incentivised in the UK. The Bill will enable it to happen and—I hope—help that mindset to develop. The LEPs will play a part in that by setting up the structure to enable it to happen.
We have put in place 24 enterprise zones offering discounted business rates and simplified planning to attract new local business and investment. The regional growth fund, the Growing Places fund and the Get Britain Building fund are providing a £3.3 billion boost to local economies and supporting tens of thousands of jobs, and through our welfare reforms we are seeking to bring welfare spending back under control and to target support. The 2010 spending review focused on reducing welfare costs through savings of about £7 billion a year.
Localising council tax support will help to deliver savings of £500 million across Great Britain—this in an area of activity where expenditure more than doubled under the Labour Government. It is not a sign of a healthy economy that expenditure on council tax benefit should have doubled between 1997 and 2009-10. Instead, we are providing strong incentives for local authorities to support growth and improve employment opportunities, helping to reduce poverty and reliance on support, as well as hold down costs in the long term. Speaking as someone whose grandfather clawed his way out of poverty in the east end, I, like plenty of other Government Members, have as much personal experience of such things as anyone else who has spoken.
The Bill has received extensive scrutiny. Its core principles were set out in the coalition agenda; we then proceeded with the local government resource review in early 2011; there was a consultation, along with eight detailed, technical papers to explain the thinking behind the reforms; and we have discussed the detail of the scheme through our local government finance working group and several sub-working groups. We have by no means ignored the views of local authorities; on the contrary, we have sought to engage with them, and will continue to do so, at every stage in the process. Those groups have been meeting frequently since January.
Localising council tax is a pragmatic approach to balancing the need for reform with ensuring a sensible level of deficit reduction, and builds on the welfare reform White Paper, published in autumn 2010, setting out our broad intentions. We undertook pre-consultation engagement with local authorities and other groups to help them to understand the issues, and held delivery partner engagement events last August and September, as well as a full three-month consultation from August to October that generated about 400 responses.
Against that background of consultation, nobody can say that the Government have not sought to engage with people over our reforms. Against that background of consultation and information sharing, last Thursday we published a series of statements of intent to provide clarity and assurance to the House and councils about how the reforms, including our proposal to fund localised support for council tax, will work in practice.
I shall tell the House what we have published so far and how much we have sought to set out the agenda. We have announced that business rates will be split 50:50 between central and local government and confirmed that central Government will return their share of business rates, in its entirety, to local government, and we have confirmed that the system will not be reset until 2020 at the earliest to give sufficient reward and long-term certainty while ensuring that the scheme will be fiscally sustainable, thus protecting the interests of taxpayers and the wider economy.
Our economic analysis, which has been independently verified, suggests that a 50% local share over a seven-year reset could create an additional £10 billion of gross domestic product. That figure is based on the multiplication of additional commercial floor space created through our incentive effect and, then, the additional gross GDP that stems from the economic activity in that commercial floor space.
We have set out the statements of intent indicating what will be in the secondary legislation, including—as was noted in the previous debate—the safety net threshold, to be set at between 7.5% and 10%, to protect against volatility.
On the localisation of council tax support, we have been clear that we will seek to provide as much detail as possible as early as possible. We continue to work with local authorities and service providers on the design of the scheme. [Laughter.] I know that the right hon. Member for Greenwich and Woolwich (Mr Raynsford) does not believe that any proposal that he did not make could be taken seriously, but that perhaps says rather more about him than about the Government.
Mr Raynsford
Perhaps the Minister will now tell the House how he believes that publishing everything that is required to enable early implementation as soon as possible is compatible or consistent with the current situation, where, eight months before local authorities have to finalise the scheme, they do not yet know what the legal requirements are.
Robert Neill
If the right hon. Gentleman deigns to read the statements of intent, he will find what is effectively an executive summary of the regulations, which will deal with how the default scheme operates, including for pensioners, who we have indicated should be protected. We are having regular meetings with our local government working group, which includes representatives of local authority treasurers, and we are also in regular contact with the principal software provider and other service providers. We are therefore doing exactly what the right hon. Gentleman would want us to do, although I doubt whether it will satisfy him, because it is not him doing it.
We have announced £30 million of initial funding to help meet the costs of planning and analysing draft schemes for both billing and precepting authorities, so we are supporting local authorities. The statements of intent are, in fact, very detailed. We have also provided a free online calculator to help local authorities to analyse the potential impacts of their proposed schemes.
Robert Neill
I notice that the hon. Lady is in what some might uncharitably term “sneering mode” this evening. I think that says something about the attitude of Labour Members towards a reform that they know needs to be undertaken, but which they never had the courage to undertake, which rather undermines their argument.
We have also taken steps in the Bill to make things easier for local authorities—for example, by clarifying that billing authorities can consult with precepting authorities, produce a draft scheme and consult more widely, all before the Bill receives Royal Assent. It is a fair point to say that the time frame is challenging, but doing those sensible things in parallel makes the scheme perfectly capable of being delivered. That is an important practical step that we have taken. We are determined to put local authorities into the best possible position to develop and consult on their local schemes. I stress that local authorities have real choices about how they develop their schemes for working-age council tax payers, what protection they choose to offer and how they choose to fund that protection.
The reality is that, under the circumstances, “one size fits all” will not work. Different areas face different challenges, and they have to make different choices. That is localism. I hope the Opposition will reflect on the fact that if they talk about being in favour of localism, it ill behoves them to seek to obstruct a Bill that, together with the Localism Act 2011, presents local authorities with the most significant practical step towards localism that we have seen in many a long day. I hope that, rather than repeating the mantra that we have heard so far—a mantra on, frankly, rather narrow ideological grounds—the Opposition will use their influence with their representatives in local government to step up to the plate, help to design the schemes that we all need to have in place and drive forward what is a real opportunity for local government in the years ahead. I commend the Bill to the House.
Hilary Benn
I know that the Minister is an enthusiast, but those watching could be forgiven for thinking that the Bill was the answer to all the nation’s ills—at one count it was, with one thing and another, solving poverty and dealing with the deficit. Also, although I have a high regard for the Secretary of State, I am surprised that he did not make that speech, because after all, this is his flagship Bill. I know that we have a part-time Chancellor; I just hope that it is not proving contagious in the Cabinet. [Interruption.] I say that genuinely, as it would have been nice to hear from the Secretary of State, who has spoken only once on the Bill—on Second Reading. The House will recall that he claimed great things for the Bill, no doubt because the coalition agreement promised
“a radical devolution of power and greater financial autonomy to local government”.
The truth is, however, that as the Bill has progressed, it has failed to live up to that promise. I shall respond directly to the Minister’s point here.
As we were reminded earlier today, it pays to try to get these things right. I say that because, with one exception, those sitting on the Government Front Bench have form. People remember that the last time wonderful words were said about a reform of local government finance, it was called the poll tax and the consequences included riots on the streets. The people would not have it and the Prime Minister lost her job. The Secretary of State argued that the current system gives central Government too much power and that he wanted to change that. We would take him at face value if that is what the Bill did, but it does not.
What the Bill does and what the Secretary of State has created is a system that gives all the power to himself—the power to determine the central top-slice; the power to set the baseline; and the power to decide the extent of the tariff for the top-up and when the safety-net should kick in. It is a whole list of powers. If this really is localism—the argument that the Minister tried to advance—why are there all these central powers? It does not sound much like localisation to me, and it does not feel much like that to local government.
That matters because when local authorities look at the way in which this Government have chosen to exercise the powers they already have, particularly in relation to spending, they have found, as we know, a pattern of cuts that is utterly unfair and the very opposite of “We are all in this together”. It also matters because, as the Minister will know, although he did not refer to it, one of the real concerns about the Bill that we have heard from colleagues in local government is that it will end up accentuating the gap between more prosperous and less well-off local authorities. That is a real concern. The Government’s only reply has been to say, “Don’t worry about it, because at least you will not be worse off in year one.”
That is why the arrangements surrounding the safety net are so important. As the House knows, some authorities are very heavily dependent on the business rate income they get from a particular factory or a big employer. At the moment, it does not matter because it all goes into the central pot and is then divided and comes back, but under this Bill, it really will matter, and the consequences of losing that income—if the business were to close or relocate elsewhere, for instance—would be devastating. In those circumstances, what those local authorities want to know is whether the Government will be there to help. What we find when we look at the papers published last Thursday is that the safety net will kick in only when authorities meet a threshold for the decline in their business rate income, and we are advised that the threshold will be set between 7.5% and 10%. That is hardly reassuring, because it means that local authorities could lose a lot of money under this Bill before help arrives. To put it another way, councils are going to have to fall quite a long way before they hit the net.
The Bill was also supposed to be about trying to get rid of a complex system for funding local government—we heard the argument a few moments ago. Frankly, however, all the Bill does is to replace one version of complexity with, in the words of London Councils, another “fiendishly complex system”. If anything, on the basis of the documents produced last week, the Bill has grown even more complex during its passage through the House.
As for enabling local authorities to receive the benefits of business rate income and its growth, what do we discover? We discover that the Government like the idea of business rate income growth so much that they are going to take half of it for themselves. That is what was announced last week. It is no wonder that the Local Government Association has described this as a “tax on local authorities”, which it strongly opposes. What is more, the Government seem to intend that set-aside will continue beyond 2015. Why? Because they want to be able to continue to impose cuts on local government after the end of the current spending review period. Having heard the Minister’s argument that this was the be-all and end-all of localism, the Local Government Association said that it was
“not a localising policy and goes against the Government's stated commitment to localism.”
That deals with the first part of the Bill. What about council tax benefit? Rank inconsistency is plain for all to see. Only a few weeks ago, the Secretary of State was touring the country denouncing those who were planning a modest increase in council tax, including a number of Tory-controlled authorities. He said that he was
“determined to protect hard-working families”,
but here we have a Bill that will end up doing exactly what he was denouncing. We have legislation that will, from next year, impose council tax increases on many unsuspecting people. And whom has the Secretary of State chosen as his target for those higher council tax bills? In keeping with the Government’s philosophy, he has chosen people on low incomes—people who do not have a lot of money—because that is why they get council tax benefit in the first place; and on that, he is strangely silent.
As if to flaunt just how out of touch they are, the Government had the nerve to say, in one of the documents published last week, that the aims of the council tax benefit cut included “reducing poverty”. This is a strange way of going about it. The Government are saying to people with not a lot of money, “You know what? We are going to cut your income to make you work harder”, which is the precise opposite of the policy that they have pursued when it comes to millionaires and the tax cut that was announced in the Budget. They also claim that they do not want to affect work incentives, but, as my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) pointed out, that is nonsense.
I pay tribute to my hon. Friend the Member for Warrington North (Helen Jones) for the forensic analysis to which she has subjected the Bill during its passage through this House. I am sure that her cogent arguments will be considered very carefully by those in the other place. I also pay tribute to other colleagues, including my right hon. Friend the Member for Greenwich and Woolwich—who chairs the Select Committee—and my right hon. Friend the Member for Wentworth and Dearne (John Healey).
I am genuinely surprised that so few coalition Back Benchers have twigged what is going on in the Bill in relation to council tax. They do not seem to know what they are about to troop through the Lobbies to vote for. As we pointed out on Second Reading, and as has been said today, cutting council tax benefit by 10% while—rightly—protecting pensioners means an average 16% cut for everyone else, but the impact will not be felt evenly.
In one of the other documents that were published last week, the Government said, “We considered whether we should even things out to take account of the different proportions of pensioners in different local authority areas, but we rejected the idea.” As I have said, the impact will not be felt evenly, because some areas contain much higher percentages of pensioners than others. The list is like a roll call of seats represented by Government Members, but it seems that Government Members—with, I think, only two honourable exceptions during Second Reading and Committee—are either completely unaware that their constituents who are currently receiving council tax benefit will face higher council tax bills than elsewhere, because their areas contain a higher proportion of protected pensioners than others, or are not too bothered about it.
Let me say this, very gently, to Back-Bench members of the coalition parties. When their constituents turn up at their surgeries in a year’s time, waving a bit of paper and saying, “Why have you done this to me?”, they will be very, very bothered about what the Bill actually does. Indeed, all our constituents are likely to face additional cuts, because the forecast baseline for council tax benefit expenditure that is being used for the Bill is expected, miraculously—from my point of view and that of my hon. Friend the Member for Warrington North—to fall. Do Members really believe that demand for council tax benefit will decline in the next two years, in the light of the current state of the economy and the fact that we are now back in recession thanks to the Chancellor’s economic policy?
When we come to the default scheme to be applied if local authorities do not come up with their own scheme, what do we find? We find that the Government’s courage fails completely in following through the 10% reduction, because the default scheme in effect replicates the current scheme. Instead of Ministers having the courage of their convictions and applying the 10% cut across the board, they have ducked that, and are expecting everyone else to show the courage they themselves have refused to demonstrate.
In conclusion, whichever way we look at it, this part of the Bill is unfair and wrong, and no amount of trying to describe it as something else is going to alter what the changes in council tax benefit will do to our constituents on low incomes who need that support. We urge other Members to join us and vote against the Bill on Third Reading because it fails to meet the test on business rates that the Secretary of State set out when moving it on Second Reading and, as we have discovered in our discussions, it is even harsher in respect of cutting council tax benefit than appeared to be the case at first sight. In both those respects, the Bill reminds us of what this coalition Government are all about: they are unfair, out of touch and do not work—and nor, I fear, will the Bill.
Mr Raynsford
The Government are having great difficulty in convincing anyone that the Bill does what they claim. They claim it is a localising measure, but, as we have heard, there is an extraordinary lack of support for it on their own Back Benches. Indeed, so far not a single one of their Back Benchers has spoken in support of it.
Local authorities are the supposed beneficiaries, but they, too, are profoundly unconvinced. Let us listen to what they say. London Councils says:
“London Councils supports the principle of business rate retention, but has grave concerns about the proposed changes set out in the Bill regarding the way in which the system will function.”
It adds:
“London Councils is strongly opposed to the introduction of local council tax reduction schemes, as set out in Clause 8 and Schedule 4 of the Bill.”
The Local Government Association says:
“In principle we support the localisation of National Non-Domestic Rates…The principle of full business rate localisation, which also ensures fair treatment of councils in areas with weak economies, would be a powerful move towards localism…However, the government proposes to keep a top slice amounting to 50 per cent of business rates for the Treasury, taking taxes paid by local businesses for local services and using them for local services based on national priorities instead. That is not a localising policy and goes against the Government’s stated commitment to localism.”
If the Government cannot convince the people who are supposedly the beneficiaries of their reforms that they are acting in their favour, I am afraid they are in serious difficulty. The Government are, indeed, clearly in deep difficulty in this regard.
Incidentally, in the earlier debate I sought to intervene on one of the Ministers, the hon. Member for Hazel Grove (Andrew Stunell), as he had inaccurately claimed that the previous Government had done nothing to allow greater local discretion over discounts on second homes. I hope he will use this opportunity to put the record straight, because, as he will know, that is simply not correct. I am sure it was an unintentional error, however. The previous Government legislated to give local councils discretion to reduce the discount on second homes from 50% to just 10%. The Minister may wish to argue about the 10% figure, but there was good reason for deciding on it, and that was a clear extension of discretion to local government. It is therefore simply wrong to suggest that we did nothing in that regard. I hope the record will be put straight.
Andrew Stunell
If it helps the proceedings, let me say I am happy to acknowledge the factual account the right hon. Gentleman has given, and I am sorry if I gave a misleading impression earlier.
Mr Raynsford
I am very grateful indeed to the Minister for that gracious apology.
The first part of this Bill is a wasted opportunity, as it fails to deliver what people want in terms of a truly localist objective. The second part, which deals with the council tax benefit changes, is deeply flawed. The changes are damaging and will either cause serious hardship to recipients of council tax benefit or will put pressure on local authority budgets. It is not just the initial £500 million that will be a problem; increased costs may come later on as a result of further claims for council tax benefit, which may result from closures of local businesses or a further period of recession. That will be an extra risk for local government, which will get no support for central Government.
Finally, on the issue of administration, the Government are acting recklessly by rushing ahead without giving adequate time for proper preparation. It has been said repeatedly by those in the know, be they people in local authorities or their IT advisers, that the timetable is too tight to allow proper implementation. I will not go through the details, as we did so in the earlier debate, but it is reckless of the Government to ignore that and to claim that local authorities and others are happy with the timetable that the Government have set—they are not.
I shall end by quoting what local government has said on this. The LGA says:
“The tight timeframe for implementing this places an even greater burden on councils and we urge the Government to give councils the necessary time to do this”.
London Councils says that
“even under best-case scenario planning, the proposed implementation timetable may well be unachievable if council tax bills are to be sent out on time”.
That is not the action of a prudent Government; it is reckless and, I am afraid, it is typical of this Bill.
Question put, That the Bill be now read the Third time.
Budget (Coventry)
(11 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Jim Cunningham (Coventry South) (Lab)
Thank you, Mr Speaker, for granting this Adjournment debate, which I very much appreciate. I wish to speak about the impact of the Budget and the Government’s policies on Coventry, and I might touch on issues that affect the west midlands. My purpose in doing so is twofold.
First, many issues arising from the Budget will have a significant impact on the people of Coventry and should be debated properly. My constituents’ serious concerns regarding the effect of Government policies deserve to be raised. It is easy to discuss Budget policies in abstract terms, but we would do well to take the time to consider what they will mean for the regions and for people.
Secondly, there is a distinct pattern to the Government’s policies and rhetoric: they are far too London-centric, as some people would say. Therefore, it is vital that we hold debates that focus on the regions and cities across this country in order to draw attention to their concerns, which the Government frequently ignore. I am sure that much of what will be discussed tonight applies to other regions and cities hit by the Budget. The Government show not nearly enough understanding of regional issues or appreciation of just how much places such as Coventry are hit by their policies.
With that in mind, I want to outline why the Government’s optimism is misplaced, certainly as far as Coventry is concerned. We must not underplay the high level of unemployment currently being suffered. On Wednesday the Prime Minister assured us that overall unemployment was down and that the number of claimants of jobseeker’s allowance had decreased. Figures from the Office for National Statistics, which were published last week, reveal that there are 10,321 unemployed jobseekers in Coventry—three fewer than were counted in March.
The Prime Minister’s complacency about the employment crisis shows an unrealistic approach to the stagnation we are witnessing in Coventry, where 4.9% of 16 to 24-year-olds are out of work. That is similar to the figure for the west midlands overall but significantly higher than that for Great Britain, which is 4%. That is particularly clear when we look at the percentage of male jobseeker’s allowance claimants. Nationally, the figure is 5.3%, which is already shockingly high, but Coventry is suffering from having 6.7% of the male population claiming jobseeker’s allowance. It is clear that the slight improvements the Government are celebrating simply do not apply to Coventry.
Against the background of high unemployment, I wish to highlight the crucial role of the public sector in the growth of Coventry’s economy. Since the millennium, Coventry has benefited from significant redevelopment and regeneration, and the public sector has been crucial in that process. The concern now is that the Government’s public sector cuts will return Coventry to the hard times of the late ’70s, and certainly the ’80s, that many of us remember. It was a ruinous time in Coventry’s history and led to a whole generation struggling to reach their potential for decades after.
Every public sector employee who loses their job through the Government’s public policy cuts is simply one more person without an income to spend on the local economy—one more person who will stop spending on businesses that in places such as Coventry are essential for stimulating growth in the local and national economies. Our public sector workers are a crucial part of our society and economy, and they do essential work for communities. It is ludicrous and poorly substantiated to claim that their work can be swiftly replaced by the private sector. There is certainly little evidence of that in Coventry.
The Government have said that they intend to rebalance the economy, and they aim to do so by cutting the public sector and replacing it with the private sector. They have certainly achieved the former, but there is little evidence visible in Coventry of the necessary investment in the private sector. The Chancellor needs a clear and vigorous industrial strategy to encourage the private sector growth that he hopes will replace the public sector.
That should be combined with a full jobs strategy, working on aligning the money going into the city with the people out of work, and targeting it at getting people back into work. That is particularly true of Coventry’s young people. Coventry saw an 87% increase in long-term youth unemployment last year, but there was nothing in the Budget to encourage any hope that this would be reversed.
The Chancellor promised that the Budget would deliver a great deal for businesses such as those in Coventry, but the Coventry and Warwickshire chamber of commerce was greatly disappointed. The chamber’s chief executive, noting that the Budget’s rhetoric on the promise for business was not matched by any content, said:
“If we’re honest, it was quite London-centric in many regards and that obviously wasn’t particularly welcomed. There were lots of small announcements that picked away around the edges but many of the things that weren’t mentioned caused most angst, such as empty property rate relief and the fact that business rates are going up.”
People throughout the country were hopeful about the prospect of a Budget that would offer real support to local businesses to allow them to grow, but they were generally disappointed by the reality, which gave little practical encouragement to allow Coventry businesses to expand, and that is likely to get a lot worse as the year progresses.
Coventry is famous for car making, but public sector workers drive much of the local economy. As we know, Becta and the Qualifications and Curriculum Development Agency are being abolished. It might seem an easy option to get rid of those education quangos, which employ a combined total of almost 800 people, many of whom are former teachers, but the relocation of the QCDA cost the Government more than £44million and came at a personal cost to many staff who relocated from London.
We cannot, furthermore, ignore the strain that these cuts put on the private sector. Friends Life, previously Friends Provident, announced that it plans to close its offices in Coventry by the end of the first half of 2012, and 428 staff are employed there. Owing to those cuts, Coventry city council will be forced by the Tory-led Government to cut more than 500 posts, possibly, over the next 18 months. The amount that the council spends in the local economy will also be reduced dramatically, and that will impact on council staff.
The front-loading of cuts means that staff losses will be required at an early stage of the spending cuts, and that will affect families throughout Coventry. This is the overall impact: Coventry city council is expected to lose about £45 million over the next two or three years; and all of that will have a significant knock-on impact on local businesses and employment in the region
We can see what is happening in other sectors as the cuts and reforms begin to bite. For example, there are cuts of more than 20% in West Midlands police, equating to 2,500 jobs, and there are two parts to the Department for Communities and Local Government’s cuts for Coventry city council: formula grant, losing over £19 million; and specific grants, losing over £17 million. The council will not be able to continue to provide services at the same level. There will be far fewer grants, with a lower overall value, and the great concern is that many grant streams will end.
In the light of these destructive cuts, many people are extremely concerned about the proposed cuts to regional pay in the public sector. I cannot condemn this policy strongly enough. We in Coventry accept that living costs are far higher in London than they are in Coventry, but that is the reason for the London allowance and London stipend made available to many employees working in London. This is far removed from the idea that public sector workers should earn less for the same work because they live in places such as Coventry.
The Treasury says that public sector pay is 18% higher than in the private sector in some parts of the UK, but that argument demonstrates a flawed approach by which the Office of National Statistics continues to compare private and public sector workers on a like-for-like basis. They are not directly comparable, and it is wilfully blind and evasive to pretend that they are. Two thirds of public sector workers are women, compared with about 40% of those in the private sector. Public sector workers tend to be older and more highly qualified. Professions such as nursing and teaching entail workers remaining in their profession for a long time, building up skills and salaries. None of those are characteristics that the public sector should be ashamed of. The private sector, by comparison, includes workers at the other end of the economy such as those in retail, catering and leisure. Industries in the private sector often pay their workers very low wages, and that skews any fair comparison of the sectors.
The public sector makes up roughly 20% of the work force, while the financial sector makes up 20% of the economy. More meaningfully, public sector wages are far from high by comparison with those in the private sector. I have always believed in lifting people up rather than lowering them down. Public sector workers are already being hit very hard with frozen salaries, higher pension contributions, and higher living costs. We cannot overestimate the negative impact on Coventry’s economy that would result from local public sector workers earning lower salaries. That would take money out of the regional economy, and the stunting effect on growth would outweigh any benefits to the Treasury. I therefore call strongly on the Government to allay the fears of those in Coventry who are worried about the prospect of regional pay cuts.
Against those fears for the regional economy, let me touch on the impact of the Government’s policies on the vulnerable people of Coventry, who will be hit from many directions by their deficit reduction plan. Pensioners have been dealt a blow by the Government as the winter fuel payment has been slashed by up to £100. According to the BBC, family fuel costs have risen by about £1,250 over the past two years, and mortgage interest rates are starting to creep up, which will affect many families. Disabled and ill people are suffering from the removal of the mobility component of the disability living allowance. Coventry’s poorest residents are being undermined in the justice system by the removal of face-to-face legal advice in favour of a cheaper phone line. These are but a few of the policies that are having a huge negative impact on vulnerable individuals, who are now having opportunities to turn to public services taken away.
I am deeply concerned about the local provisions for our young people. In June, £335 million was taken from the council through the abolition of Building Schools for the Future, which has yet to be replaced despite many promises about announcements. The Government cannot simply remove this vital investment from Coventry without even suggesting an alternative, let alone funding one. The Budget bore no reference to allocations of funding for school buildings. Aside from the obvious implications for Coventry schools, the Government are missing a great opportunity to stimulate the construction industry. I understand that the Government’s private building scheme is expected to rebuild between 100 and 300 schools nationally, but they have been dragging their feet on this issue for 20 months. Coventry city council has made it clear that some schools are in dire straits and urgently in need of investment. Without details of the Government’s plans, the council is unable to make its own plans.
As of April, the Connexions careers service has been operating on a budget more than 70% smaller than in April 2010. That service gives young people the skills and confidence they need to get in to the workplace, and its downsizing will no doubt contribute to the high youth unemployment that we experience as a city and as a region.
The children, learning and young people’s directorate has announced the loss of a further £1.2 million as a result of the 5% cut to the standards fund. The council had been relying on those crucial retention funds, but they will not be transferred to the next financial year.
On that note, the Friargate development, which will revitalise and transform Coventry city centre, was going ahead on the expectation that Coventry would be one of the eight core cities to benefit from the tax incremental financing scheme. The Deputy Prime Minister told the local authority in 2010 that Coventry would be a recipient of that scheme. Not only is Coventry excluded, but the pot of money has been reduced to £150 million. The council was relying on that money, which was to be paid back on a tax basis, to allow the development to go ahead.
The abolition of the funding from regional development agencies means that there is little funding to lever in private sector investment for large-scale redevelopment projects. Some colleagues will remember that Coventry and Warwickshire were led to believe that they would get an enterprise zone. Once again, they lost out. I therefore call on the Minister to reconsider the use of tax incremental financing to allow the city to grow. I understand that the council is also looking to take part in the city deals initiative. The city’s project is urgently in need of that money.
All of that will have an irreversible effect on the economic growth of the region and of Coventry. The leader of Coventry city council estimates that up to £25 million will be taken out of the local economy. The public and private sectors will not be able to invest in regeneration and infrastructure in the region. With the loss of the £355 million schools programme and the missed opportunity for the building industry, it is clear that the Government are wilfully blind to the devastating effect of their policies in Coventry. In addition, Coventry university hospital has to find an additional £28 million over the next year or two. The Government need to stop thinking only of London and think more about the other regions and cities that make up this country.
Mr Geoffrey Robinson (Coventry North West) (Lab)
Thank you, Mr Speaker, for granting this debate, and I congratulate my hon. Friend the Member for Coventry South (Mr Cunningham) on securing it. There may not be many of us here this evening, but you are still in the Chair, Mr Speaker, and we will be able to speak directly, without a lot of interruptions, beyond this Chamber to the people of Coventry about the list of indictments, which my hon. Friend stated so powerfully, of the effects that the Government’s policies will have on our city, whether or not that is their intention.
My hon. Friend gave a long list of problems that the Government’s policies are creating for Coventry. I will start with Friargate. The inner city of Coventry is pretty well known. During the war, it was the most bombed city in the country, starting with the November raids right back in 1941. Afterwards, everybody thought that they owed a particular debt to Coventry, which was wonderful—I was not there at that time, of course—and the cathedral and the city centre were rebuilt. City planning was such at that time that good money, planning and thinking were put into it. A ring road was put around the city, and to this day traffic flows around Coventry and in and out of it marvellously well.
The trouble is that the city centre has become derelict. People do not eat there socially, congregate there or spend time there. It is desolate, which leads to all those activities that we do not want to see in any of our city centres. We need a revision of the original city planning more than 50 years ago, which is long enough.
Early on, the Government thought of an imaginative and good scheme called the tax incremental financing scheme, which was to be partly funded by incremental taxes from the locality, region or city, but would have Government encouragement and power behind it. No less a person than the Deputy Prime Minister promised that we would be beneficiaries of it. Sadly, however, we are used to his broken promises,. I say this as an admirer of his, but he has made and broken many promises, including on tuition fees. Despite being given a specific promise that we would be included in the eight cities that could contribute to their own rehabilitation, which we desperately needed, we have not been.
I understand that all is not lost. A new initiative—an initiative rather than a scheme this time—has been put forward in which Coventry has been invited to take part, and our council has responded positively. I hope that Coventry can usefully and profitably participate in the city deal initiative. I regret to say that the city centre is a blot on the copybook of our huge post-war efforts to rebuild the country and its cities. We did not succeed with it, and we need to do so in the near future.
Another area of great disappointment has been Coventry’s schools. The cancellation of the Building Schools for the Future programme has been a great setback. We were on the point of signing contracts, but as a responsible council, Coventry held back, and the Government applauded it for doing so. We urged it to sign the damn things and get the contracts signed, but no, it held back.
Two schools in my constituency were affected. One, Woodlands, is an exemplary comprehensive built after the, war with the usual ’50s and ’60s concrete construction. The other, President Kennedy school—the name tells the date—was constructed on similar principles. Those schools are now in urgent need of replacement, but because the council did not want to behave even slightly irresponsibly and would not sign the contracts, we lost out by a total of £335 million, as my hon. Friend mentioned. I visit those two schools regularly and work with them. The attitude of the Secretary of State for Education towards them is very off-hand. It is not that I mind personally, because it does not hurt me, but he seems to ignore the fact that those schools had a good and reasonable case for making a demand on the public purse.
The Secretary of State wrote in similar terms to Becta and to the Qualifications and Curriculum Development Agency. In fairness, the Conservatives said before the election that they would get rid of the QCDA—typically, they said that without hearing the case, but at least they had said that that was what they were going to do. The letter to the QCDA was, if I may say so, peremptory and impolite; it was unworthy of him, but at least they had said what they would do. Becta, though, was suddenly closed without anybody knowing anything about it. It seemed as though Coventry was being targeted again—I do not intend to make the obvious military historical reference here—as the centre that had to be hit.
My hon. Friend the Member for Coventry South mentioned what the chief executive of the Coventry and Warwickshire chamber of commerce had said. I promise that she is no supporter of mine or of the Labour party. I am pleased to see the Economic Secretary on the Treasury Bench, because I would like her to listen to what the chief executive said. The best that she could find to say was, “If we’re honest”—that is very difficult for Governments to do, as I appreciate—the Budget
“was quite London-centric in many regards and that obviously wasn’t particularly welcomed.”
That is the final judgment of a chamber of commerce chief executive, a representative of the very people the whole Budget was meant to be about supporting.
I put it to the Economic Secretary, who is to respond to the debate, that we desperately need help. We do not want handouts, we want help up. That is what we are after. If only she would meet us halfway, we could still do great things in Coventry, but we need a Government who are capable of responding to the need that exists.
The Economic Secretary to the Treasury (Miss Chloe Smith)
I shall do my best in the six minutes remaining to cover a selection of the points raised by the hon. Members for Coventry South (Mr Cunningham) and for Coventry North West (Mr Robinson). I thank both for the passion with which they have spoken about their city in this interesting debate.
The Government made clear in Budget 2012 that our priorities are threefold: to create a stable economy; to create a fairer, more efficient and simpler tax system; and to introduce reforms to support growth. The Budget and the national infrastructure plan published the preceding autumn set out the Government’s latest steps towards achieving those priorities, based on a new model of sustainable and balanced growth, including in Coventry and more widely.
As the hon. Gentlemen made clear, the west midlands is not without its challenges, but the region remains a significant contributor to the national economy. The reforms set out in the Budget will give businesses and individuals in the region a further boost by cutting corporation tax by an additional 1% on top of the rate cuts announced last year. From April this year, the rate will be reduced from 26% to 24%—it will eventually fall to 22% in 2014.
The reforms also provide a boost by increasing the personal allowance by £1,100, taking 75,000 people in the west midlands out of tax altogether, and by increasing the Growing Places fund to provide additional funding for the infrastructure needed to unlock developments that will lead to jobs and growth. Local enterprise partnerships in Coventry and Warwickshire will receive a further £4.1 million. We confirm that Birmingham has been selected to become a super-connected city, and we are investing almost £60 million in stalled development projects within the west midlands. Furthermore, we will support individuals and families to buy new build property with just a 5% deposit through the NewBuy scheme, and increase the maximum right-to-buy discount to £75,000, which is £49,000 more than the current west midlands limit of £26,000.
The hon. Member for Coventry South spoke of youth unemployment, which I agree is a vital issue for our country. He will be aware of the answer given to him by the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), on 13 December 2011. He directed the hon. Gentleman
“to the new programme recently announced to make it easier and simpler for SMEs to take on apprenticeships”,
and said that the Government
“are providing funding to the tune of up to £1,500 per apprentice.”—[Official Report, 13 December 2012; Vol. 537, c. 254WH.]
That scheme is to be welcomed.
The challenge laid down by the hon. Gentlemen, which the Government have taken up, was to return the UK economy to sustainable economic growth that is more balanced across the country. We have established local enterprise partnerships and enterprise zones.
Miss Smith
I have only three minutes left, but if the hon. Gentleman wishes to intervene, I will give way.
Mr Robinson
The Minister mentioned the west midlands, but could she not say something about Coventry? She even mentioned Birmingham. I made some unfortunate remarks about Birmingham not so long ago—I will not repeat them—but we are talking about Coventry tonight.
Miss Smith
The hon. Gentleman pre-empts my next paragraph. I should like to draw his attention to the successful bids in the Coventry and Warwickshire LEP area, including the Elonex advanced engineering supply chain and Alamo Manufacturing bids, which I am sure he welcomes, because they and others will create many thousands of jobs in the west midlands.
The hon. Member for Coventry South said there was little evidence of private sector growth. I simply dispute that statement. The core city deal for Birmingham, which was mentioned by both hon. Gentlemen, will have spillover effects for the wider west midlands region, although I hear the call for me to speak about Coventry in its own right.
The hon. Member for Coventry South raised concerns about the impact of regional pay—those were his words—across the country. I reassure him that the Government are not setting out detailed proposals at this stage, but simply asking the experts how public sector pay might better reflect local markets. He will be aware that the Institute for Fiscal Studies made an estimate of the public sector pay premium—he quoted off-hand some figures in that respect. In principle, the premium has the potential to hurt private sector businesses, which need to compete with higher public sector wages. A premium could prevent them from expanding and lead to unfair variation in the quality of public services.
On public spending, the previous Government left an appalling financial mess behind, which this Government have a moral obligation to sort out. We have delivered a challenging but fair settlement for local government, including for Coventry. The formula grant in Coventry will be £493 per person in 2012-13. The average per person across England is far lower, and it is £200 to £300 per person in some southern areas. That reflects the higher level of need in Coventry.
I thank the hon. Gentlemen for speaking in the debate. I believe the approach set out in the Budget is a strong one and am confident that it will benefit all areas of the country, including Coventry and its environs.